Alpha company sells perfumes in the region of London. Recently in 2017, a customer of Alpha Company suffered from skin allergy and considerable pain and discomfort by using the perfume sold by Alpha Company, sued the company for compensation. On 31/12/2017, the legal advisers of Alpha Company believe that the company will probably have to pay financial compensation of $200,000 to the customer. On 31/12/2018, the claim has still not been settled and the legal adviser now believes that the claim will probably be settled in the customers favour at $300,000. On 31/12/2019, still, the claim has not settled and now the legal adviser believes that the customer is almost certain to win the legal dispute and the claim may be at $250,000. On 31/12/2020, the claim is settled at $250,000.

a) According to IAS 37, State with reasons how Alpha Company should record the above transactions in the financial statements for the year ended 31st December 2017, 31 December 2018, 31 December 2019, and 31 December 2020 with relevant accounting entries (journal entries) and notes wherever applicable.

b) Briefly explain with suitable examples, the meaning of Provisions as specified by IAS 37.

c) Demonstrate with suitable examples, the difference between Provision and Accruals.