1, Baker Company was the subject of a lawsuit by Ward Company during 2020. As of December 31, 2020, Bakers lawyer states that it is probable that Baker will lose the lawsuit and estimates that it will have to pay $5,000,000.

Instructions:

How will Baker Company report this situation on December 31, 2020 ( its fiscal year end ) if:

1. Baker is a public company following IFRS. (2 marks)

2. Baker is a private company following ASPE. (2 marks)