On 1 February 2022, Keith filed a lawsuit against Hamilton Deliveries Ltd for compensation of $5 million as a result of failure to deliver goods on time and some items were faulty. At the end of the financial year on 31 March 2022, the outcome of the hearing is unknown. The lawyer is of the opinion that there is a 40% chance that Hamilton Deliveries will be found liable for the damages.
Required
Discuss how the court case should be recorded by Hamilton Deliveries Ltd on 31 March 2022. Your answer must include justifications using the relevant criteria in NZ IAS 37, the necessary journal entry (if any) or any note disclosure required to comply with NZ IAS 37 requirements (if any). (8 Marks)