a. In the Financial Statements for the year ended 31 December 2011, LD Ltd has a created a provision for damages of $600,000 assuming a 60% probability that it will lose the legal case. The court decided the case against LD Ltd on 10 February 2012 and awarded damages of $1m. The financial statements are due for issue on 25 February 2012.

b. IL Ltd. has an amount due from FD Ltd. amounting to $20 million as at 30 March 2012. The financial statements are expected to be issued on 14 May 2012. FD Ltd. declared bankruptcy and it is certain that IL Ltd will receive nothing because all the assets will be exhausted in satisfaction of government claims.