What is important in these scenarios is to find answers to the following questions:

Is there a present obligation as a result of a past obligating event?

Is a transfer of economic benefits probable during the settlement of the obligation?

Can a reliable estimate be made of the amount of the obligation?

If the answer to all questions is "yes", then a provision should be recognised in the

financial statements under IAS $37.$

I$)$ Refurbishment costs $-$ no legislative requirement

A furnace has a lining that needs to be replaced every five years for technical reasons.

At the balance sheet date, the lining has been in use for three years.

m$)$ Refurbishment costs $-$ legislative requirement

An airline is required by law to overhaul its aircraft every two years.

n$)$ Legal case

Lawson INC is currently suing one of its suppliers for failure to supply goods according

to contract. Legal advice suggests that that the company will probably win the case and

will probably be awarded damages of approximately $$500,000.$