Provision/Contigency: Legal counsel advises that it is probable that Hanover will prevail and will be awarded 300,000 (considered a material amount for Hanover). E. On December 8, 2022, Hanover's board of directors approved a plan to close one of its factories and relocate the operations to another city. In the past, Hanover has had a practice of paying retrenchment benefits to employees who are made redundant by its relocation plans. Hanover announced the relocation plans to its employees on December 20, 2022, although no announcement was made of details concerning the retrenchment benefits. In January 2023, the factory was closed and Hanover paid 1,200,000 as retrenchment benefits to employees who were made redundant by the relocation of the factory. Hanover also spent an additional 50,000 in January 2023 on the relocation of plant and machinery from the old factory to the new location.

Requirements: 1. Determine the appropriate means of reporting each situation above (whether contingent liability, provision, or contingent asset).

2. Prepare any necessary journal entries and state whether disclosure in the notes is necessary.