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(a) Explain the differences between provision and contingent liability in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets and why they are
(a) Explain the differences between provision and contingent liability in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets and why they are accounted for differently. [6 marks] (b) An employee of Economic Berhad was injured while carrying official duties. He has filed a claim for damages from the company for RM400,000. There is no insurance coverage provided for the employees and the legal opinion is that the company may have a 60% probability to be held liable. Discuss whether a provision should be created.
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Answer a The key difference between a provision and a contingent liability is that provision is accounted for at present as a result of a past event whereas a contingent liability is recorded at prese...
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Operations Management
Authors: R. Dan Reid, Nada R. Sanders
4th edition
9780470556702, 470325046, 470556706, 978-0470325049
