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What is the amount of the provision that should be provided for by the company in accordance with IAS 37 based on the scenarios below?

What is the amount of the provision that should be provided for by the company in accordance with IAS 37 based on the scenarios below?

i. Somerset Deliveries Plc is an outsourcing company that does deliveries for Several other companies. The company is being sued by a customer for $ 500 000 for breach of contract over a cancelled order. The company has obtained legal opinion that there was a 20% chance that the company will lose the case. Accordingly, the company has made a provision of $100 000 ($500 000 20%) in respect of the claim. The unrecoverable legal costs of defending the action are estimated at $50 000.These costs have not been provided for as the case will not go to court until the following year. 4MARKS

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