Please help, refers to AASB
At our recent board meeting, several directors raised concerns about a pending legal claim against Beachlife Ltd. While Beachlife Ltd was in a strong financial position at 30 June 2017, one of its competitors is suing for patent infringement as at October 2017. The compensation claimed in relation to the patent infringement is $87 million. The hearing for the dispute had not been scheduled until July 2018. The legal adviser of Beachlife Ltd was of opinion that there was 30% chance that Beachlife Ltd would be found guilty. There was 60% chance that Beachlife Ltd would need to pay $50 million as compensation to the plaintiff, if it is found guilty, and 40% chance for $30 million compensation. Can you please provide advice regarding the correct accounting and disclosure of this legal claim?