CERTYNEX IFRS ACADEMY

Xandrel sold 4,000 scooters in 20X5 with a one-year contractual warranty. Based on its history, each scooter has a 3% chance of needing a repair. What does Xandrel conclude at 31 December 20X5?

No provision: 3% is too low a probability for each scooter.

No provision until a claim has been received.

A provision, the outflow being probable for the class of warranties as a whole.

A contingent liability disclosed in the notes, since each repair taken individually is merely possible.