Hamilton Airlines is faced with a situation that needs to be resolved before the financial...
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Hamilton Airlines is faced with a situation that needs to be resolved before the financial statements for the company's year ended December 31, 2017 can be issued.
The airline is being sued for $5 million for an injury caused to a child as a result of alleged negligence while the child was visiting the airline maintenance hangar in March 2017. The suit was filed in July 2017. Hamilton's lawyer states that it is likely that the airline will lose the suit and be found liable for a judgement costing anywhere from $600,000 to $3 million. The lawyer adds that the expected value of the cost could be calculated to be $1,200,000.
1. Prepare the journal entries and disclosures (if any) required for the Dec 31, 2017 financial statements assuming that the firm follows IFRS.
2. Prepare the journal entries and disclosures (if any) required for the Dec 31, 2017 financial statements assuming that the firm follows ASPE.
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