At the end of an accounting period, a company has each of the following:
(a) A present obligation which will probably require an outflow of resources.
(b) A present obligation which will probably not require an outflow of resources.
(c) A possible obligation arising from a disputed past event; the company denies that this event occurred and a legal case is currently proceeding; it seems likely that the company will win the case and that an outflow of resources will not be required.
(d) A possible obligation arising from another disputed past event; the company again denies that this event occurred and again a legal case is currently proceeding; it seems likely that the company will lose this case and that an outflow of resources will be required.
State, for each of these obligations, whether the company should recognise a provision, disclose a contingent liability or do nothing. Assume that all of the obligations arise from past events and that reliable estimates can be made of the amounts concerned.
