A claim has been made against the company for injury suffered by a pedestrian in connection with building work by the company during the year. Legal advisers have confirmed that the company will probably have to pay damages of 400,000 but that a counter claim can be made against the building sub-contractors for 150,000.

In January 2021, a sales representative was injured in a car accident. A claim for compensation was lodged against the company. Legal opinion is that there is a 70% chance that Denver will have to pay some compensation to the injured person. Despite a claim amount of 1,000,000 there is no reliable estimate regarding the amount payable as legal opinion differs substantially on how much the employee contributed to the accident.

Advise the management of Denver on the proper accounting treatment of each of the above issues to ensure that the financial statements are prepared in accordance with the relevant international accounting standard.