CERTYNEX IFRS ACADEMY

Vélanne is ordered to pay 500,000 to a customer. Its insurer has confirmed it will cover 350,000, which is virtually certain; if the insurer did not pay, Vélanne would remain liable for the full amount. What is the treatment in the statement of financial position?

A provision of 500,000 and a reimbursement asset of 350,000.

A provision of 150,000, the part Vélanne will ultimately bear.

A provision of 500,000, with the insurance recovery merely disclosed.

No provision, as the insurer covers most of it.