In a graduation ceremony held in November 2022, guests were served with foods manufactured by Kim & Den Bhd. After the ceremony, ten people fell seriously ill as a result of food poisoning from eating the food served in the ceremony. At 31 December 2022, the company was advised that there was probably no liability and the matter was disclosed at that date. As the result of developments in the case, which is still not settled, the company was advised by its legal team that it is now probable, as at 30 June 2023, that the company will be found liable and required to pay RM600,000 to settle the case. Some directors consider that the matter should remain a disclosure until the court case decides the matter, while others consider that provision should be made for it in the financial statements for the year ended 30 June 2023.

What do you think? Justify with reference to MFRS 137.

Answer rating: 100% (QA)

According to MFRS 137 Provisions Contingent Liabilities and Contingent Assets a provision should be ... View the full answer