Question
A company faces a lawsuit for patent infringement. Legal
advisors state a 55% probability of losing with damages of ₹50 crore, but range could be ₹40–₹70 crore. Settlement discussions ongoing. How should the company account at year-end?Solution
Ind AS 37: provision required if obligation probable (>50%). Best estimate = most likely outcome; if no single most likely, use midpoint of range. Hence provision, not just disclosure.
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