PT AAA is currently facing lawsuits for violating the Law on AMDAL. PT AAA disposes of its industrial liquid waste into the river which causes the river to be polluted and residents cannot use the river water for their daily needs. Environmental activists assess river pollution actions carried out by PT AAA not only harmful to the environment, but the residents around the factory. Therefore, environmental activists sued PT AAA for Rp. 3.3 billion for this action. Currently, the legal process is still ongoing and PT AAA has utilized the services of a professional legal consultant.

REQUESTED:

1. How is the accounting treatment of the case if it is probable that the lawsuit will be won by PT AAA?

2. What is the accounting treatment for the case if the environmental activist PT is likely to win the lawsuit?

3. How is the accounting treatment of the case if the case is terminated?

Answer rating: 100% (QA)

Solution Based on the Provision of IAS 37 Provisions contingent liabilities and contingent assets A ... View the full answer