Question

The environmental activist organization complained PT Arjuna for the actions of environmental pollution due to production activities that did not meet the standards so as to pollute the river which was used as a source of water for local residents. The environmental activist institute brought the case to court with the demands of PT Arjuna to carry out river sterilization and replacement of waste filter equipment according to the standard for PT Arjuna's subsequent production. At the time of preparation of the 31 December 2015 financial statements the process of environmental safety standards for the production used by PT Arjuna proved to be unfulfilled. However, the consultant has not been able to ascertain how much the loss must be paid by the company due to these demands because there are no test results that indicate how much the level of river pollution due to PT Arjuna's activities. How should the entity disclose and present in the financial statements related to the legal litigation?

Answer 1

Its an contingent Event. The Occurance or non- occurnace of the same is dependent on the upcoming future event.

The Following shall be addressed by consultant:

1. Diclsoure in the Foot note shall be given for the ongoing litgation , so that the stakeholder at large be informed about the same.

2. Where the quantum of the expense is not dertermined. The quantam can be tentatively acertained by reviewing the simillar cases at large from the official sources at large. i.e, the expense amount would come around the already executed event by any other entity.

3. Contraray, Estimation can be acertained with help of the Technical consultant well equipped with such cause. Taking help of expert of such field to determine the quantum of the same.

4. Provision for the same shall be created in the Books of accounts if the quantum is aceertained.