Contingent Liabilities Below Are Three Independent Situations

Essay

Contingent liabilities
Below are three independent situations:
1. In August, 2020, a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued his employer, Prince Corp., for $ 500,000. Prince's legal counsel believes it is possible that the outcome of the suit will be unfavourable and that the settlement would cost the company from $ 150,000 to $ 400,000.
2. On October 4, 2020, a lawsuit for breach of contract seeking damages of $ 2,400,000 was filed by an author against Queen Corp. Queen's legal counsel believes that an unfavourable outcome is more likely than not. A reliable measurement of the award to the plaintiff is between $ 600,000 and $ 1,800,000.
3. King Ltd. is involved in a pending court case. King's lawyers believe it is likely that King will be awarded damages of $ 700,000.
Instructions
Discuss the proper accounting treatment, including any required disclosures, for each situation. Give the rationale for your answers. Assume all companies involved use IFRS.