c) Cinema plc operates in the entertainment industry. The following transactions were realised during the year ended 31 March 2021: i. Cinema plc identifies a provision for 850,000 at the year-end 31 March 2021. The outflow of 850,000 is expected to be on 31 March 2022. Specific risk associated with this provision has already been considered when calculating the best estimate for the provision. A suitable risk-free discount rate is identified as 6% for 2022. ii. The management board of Cinema plc took a decision on 20 March 2021 to close down one of its music theatres performing in the city centre. The board also agreed the detailed plan for closure put forward on 24 March 2021. However, no further action was taken on the closure by the year ended 31 March 2021. The board considered that costs of closure would be approximately 500,000. Required: Briefly explain the criteria for the recognition of provisions in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and discuss how Cinema plc should report the above transactions (i and ii) in its financial statements on 31 March 2021 under IAS 37.

c) Cinema plc operates in the entertainment industry. The following transactions were realised during the year ended 31 March 2021: i. Cinema plc identifies a provision for 850,000 at the year-end 31 March 2021. The outflow of 850,000 is expected to be on 31 March 2022. Specific risk associated with this provision has already been considered when calculating the best estimate for the provision. A suitable risk-free discount rate is identified as 6% for 2022. ii. The management board of Cinema plc took a decision on 20 March 2021 to close down one of its music theatres performing in the city centre. The board also agreed the detailed plan for closure put forward on 24 March 2021. However, no further action was taken on the closure by the year ended 31 March 2021. The board considered that costs of closure would be approximately 500,000. Required: Briefly explain the criteria for the recognition of provisions in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and discuss how Cinema plc should report the above transactions (i and ii) in its financial statements on 31 March 2021 under IAS 37