A building contractor received a claim for 1 million on behalf of one of his workers paralysed
Question:
A building contractor received a claim for £1 million on behalf of one of his workers paralysed with head injuries suffered when scaffolding at a building site collapsed. The insurance refused to meet the claim on the premise that the worker was not wearing a protective helmet at the time of the accident. At the time of preparing the financial statements, as at 30 June 2012, the legal opinion of the solicitors was that damages of between £400,000 and £750,000 may be awarded against the company depending on whether the paralysis is temporary or permanent. The medical opinion is that there is a 25% chance that the paralysis will be permanent. State with reasons whether the contractor should account for any liability or provision or merely disclose a contingent liability.
Step by Step Answer:
Financial Accounting An Introduction
ISBN: 9780273737650
2nd Edition
Authors: Mr Barry Elliott, Mr Augustine Benedict