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Question 2. Jones Co, manufactures a range of products. At 31 December 20X0 it has been notified of the following claims: (i) It faces 100
Question 2. Jones Co, manufactures a range of products. At 31 December 20X0 it has been notified of the following claims: (i) It faces 100 claims in respect of product Alpha. The company's past experience indicates that 30% of the claims will be successfully defended. 70% will probably need settlement and rectification at a cost of $100,000 per unit (ii) It also faces a single legal claim for product Beta. The company's legal advisers have indicated that the claim has a 30% likelihood of success and a 70% likelihood of failure. The cost of failure would be $1,000,000. Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets what provision, if any, should be made in the financial statements? NIL $7,700,000 $8,000,000 $11,000,000
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