A number of independent situations are set out below. 

1. A former employee of Moncton Minimarket Inc. sued the company for $500,000 alleging that the company’s owner sexually harassed her. Moncton’s lawyers suggest that the lawsuit has a 20 to 30% probability of success and that, if successful, the plaintiff will be awarded between $100,000 and $200,000. 

2. Calgary Pyrotechnics Ltd. received a $5,000 fee to guarantee the $500,000 bank indebtedness of Edmonton Fireworks Inc. The fair value of the guarantee is initially estimated to be $5,000. 

3. Humboldt Syringes Co. sued a competitor for $300,000, alleging corporate espionage. Humboldt’s legal counsel believes that the company will be successful and will be awarded somewhere in the range of $250,000 to $300,000.

4. A customer sued Cache Creek Tractor Corp. for $100,000 for breach of contract. Cache Creek’s solicitors advise that they will almost certainly be found liable. Based on previous results, counsel estimates that there is a 50% probability that the courts will award the $100,000 being sought; a 30% probability that $90,000 will be conferred; and a 20% probability that the judgment will be $80,000. 

5. Saskatoon Conveyor and Clutch Ltd. is in the midst of preparing its financial statements for the year ended December 31, 2018. Saskatoon has been in ongoing discussions with its bankers about renewing its $5,000,000 loan maturing on June 30, 2019. While nothing had been finalized by year-end, the bank did agree to extend the maturity by five years on January 15, 2019. 

Required:

For each of the above situations, assuming that the entity reports its financial results in accordance with IFRS, describe how the event should be dealt with in the financial statements of the underlined entity and explain why. Prepare all required journal entries.