A customer of Pluto Co claims that, on 25 August 20X8, a fault in a product sold by Pluto

caused damage to its production line. The customer is claiming damages of $150,000. Pluto

has accepted liability but offered to pay $80,000 to repair the damage. The customer has

refused this offer. The matter will be settled in a court case which is scheduled for December

20X9. Plutos legal representative has indicated that the court is highly likely to accept the

customers claim for $150,000.

How should this matter be dealt with in Plutos financial statements for the year to 30

September 20X8?

a.As a non-current liability of $80,000

b.As a non-current liability of $150,000

c.As a current liability of $80,000

d. As a current liability of $150,000