Example # 1Company A has a lawsuit outstanding.

The company lawyers have stated that there is a 65% chance they will be found liable.

It is expected that the company will have to pay between $ 100,000 and $ 200,000 with all estimates in the range being equally likely.

What is the proper accounting under IFRS? ASPE?

Example # 2

Company B is being sued for product liability.

The company lawyers have stated that there is a 85% chance they will be found liable.

They have determined that there is a 65% probability of an award of $ 200,000, 25% chance of an award of $ 300,000 and 10% chance of an award of $ 400,000.

What is the proper accounting under IFRS? ASPE?

Example # 3

Company C has a warranty on its products.

If all products sold had a minor defect the Company estimates that the total cost of the warranty would be $ 1,000,000.

If all the products sold had a major defect the total cost is estimated to be $ 4,000,000.

The Company believes that 60% of the products will be sold with no defects, 25% will be sold with minor defects and 15% will be sold with major defects.

What is the proper accounting under IFRS? ASPE?