Pennask Corporation follows IFRS. Below are independent situations: During 2020, a factory worker was injured. The accident was partly the worker’s fault, and partly Pennask’s fault. The employee has sued Pennask Corp. for $600,000. The corporation’s legal counsel believes it is possible that Pennask will lose the lawsuit. If they lose, the estimated loss is $150,000 to $400,000. During 2020, Pennask was sued for $2,500,000. The plaintiff is alleging breach of contract, and defense counsel believes an unfavourable outcome is more likely than not. A reliable measurement of the award to the plaintiff is between $600,000 and $1,800,000. During 2020, Pennask sued another company. The corporation’s legal counsel believes it is likely that Pennask will be awarded damages of $1,000,000. In November of 2020, one of Pennask’s factories caught fire and was destroyed. Insurance will cover the full loss except for a deductible on the policy of $400,000.

Pennask is quite concerned that insurance premiums will increase substantially, perhaps even double. Instructions For each situation, fully discuss the correct accounting treatment, including any required disclosures. Provide an explanation for your answers. A reasonably thorough answer would be 50 to 70 words.