Provisions and Contingencies As the financial director of Bellrock plc, you have the following to consider in the accounts for the year to 31 December 2012. (a) A customer has made a claim against Bellrock for defective goods. The claim is nearing settlement and Bellrock's legal advisers think it is probable that a sum of 300,000 will be paid by Bellrock in settlement, in addition to all legal costs. (b) Bellrock sells goods with a warranty. If minor defects arose in all products sold, repair costs of 2 million would arise. If major defects arose in all products sold, repair costs of 8 million would arise. Bellrock's experience is that 20% of sales lead to claims for minor defects and 5% lead to claims for major defects. (c) In September 2012 Bellrock relocated to new office premises. The lease on the old premises runs to 31 December 2014 at a rent of 180,000 per year. Bellrock has been unable to find a tenant to sub-let the old office premises. (d) A law passed in October 2012 requires the fitting of new smoke filters at a cost of 150,000 by March 2013. This work has not yet been carried out. (e) Bellrock has a provision of 200,000 brought forward at 1 January 2012 against a legal claim. During the year to 31 December 2012, Bellrock won this court action and therefore the provision is no longer needed. However, environmental penalties of some 200,000 have been threatened by the Health & Safety Executive and it is probable that this cost will have to be paid. The directors have therefore proposed that the provision be carried forward. Required Explain, quantifying your answer where possible, how the above should be accounted for in accordance with IAS 37.