Assignment Scenario 02 Classic Co sells goods with a one-year warranty and had a provision for warranty claims of RO 68,000 at 31st Dec 2018. During the year ended 31st December 2019, RO 26,000 in claims were paid to customers. On 31st December 2019, Classic Co estimated that the following claims will be paid in the following year:

Scenario	Profitability	Anticipated cost
Worst case	5%	RO 140,000
Best case	20%	RO 28,000
Most likely	75%	RO 60,000

Question 2

You are required to: A. What amount should Classic company record in the statement of profit or loss for the year ended 31st December 2019 in respect of the provision?

(1 Marks)

B. Appraise the key concepts about Provisions, Contingent Liabilities and Contingent Assets in accordance with IAS 37. Clearly stating whether it should be recognized in financial statement or disclosure as notes to accounts. Enhance your answer by giving appropriate examples of provisions including increase and decrease ,Contingent Liabilities and Contingent Assets in accordance with IAS 37.

(7 Marks)

(Appraise & examples : 4 marks + Individual presentation : 3 Marks)

Note: For solving question no. 2, you should use information given in Assignment Scenario 02.