Lily Smith (Lily) is the financial accountant for Home Equipment Limited (HE Limited), a garden equipment manufacturer that has its head office in Wellington, New Zealand, and operations in New Zealand, Australia, and Canada. HE Limiteds financial statements are prepared in accordance with New Zealand Equivalents to International Financial Reporting Standards. During the preparation of HE Limiteds financial statements for the year ended 30 June 2021, Lily considers this:

HE Limited has 100 laptops available for use to its mobile sale consultants. These laptops require repair and maintenance each year. Lily has gathered the repair and maintenance history of these laptops over the last two years and estimated that the average repair and maintenance spend for each laptop is $150 per year. Laptops that are purchased and sold in the financial year will not incur repair and maintenance costs. Lily has estimated that 10 laptops will be purchased or sold in the year to 30 June 2021.

Determine how Lily would account for this item in HE Limiteds financial statements for the year ended 30 June 2021. Justify your response with specific references to NZ IAS 37 Provisions, Contingent Liabilities and Contingent Assets.