(i) On 10 April 2015, the board of Directors of Victoria Pty Ltd took a decision to close down a division. The financial year end of Victoria is 30 April 2015. No communication has yet been made to those affected by the closure and no steps have been taken to implement the decision. (ii) Victoria must incur clean-up costs for environmental damages caused directly by its manufacturing operations. (iii) Management has prepared budgets for the next two financial years. It expects that operating losses will be incurred in both years. Use the following format to present your answer to Question 1 above. Give reasons for your response to whether a provision is created or not. 1.2 What is the difference between a provision and a liability according to IAS37 (3) 1.3 Explain the difference between an obligation event and constructive obligation (5) 1.4 Adelaide (Pty) Ltd sells goods with a warranty that covers the cost of repairs for any defects in its goods within the first 12 months of purchase. Past experience and future expectations indicate the following pattern of the probable of repairs. % of goods sold Nature of defects Cost of repairs if all items have defects 80% No defects Nil 15% Minor defects R750 000 5% Major defects R2 500 000 Required Calculate the provision for warranty repairs using the expected value method