When multiple likely amounts are equally probable, how is the measurement of a provision determined?

In the scenario where multiple likely amounts for a provision are equally probable, the appropriate approach is to determine the measurement based on the average of those amounts. This method is consistent with the principle of reflecting the most accurate estimate of the liability that may arise.

Using the average amount allows for a balanced view of the potential financial impact. It shows that while there may be several outcomes that are equally likely, the average represents a fair representation of the expected obligation. This aligns with the objective of financial reporting to provide information that is relevant and faithfully represents the underlying economic realities.

Opting for the highest amount would likely overstate the liability, while choosing the lowest could understate the financial obligations that the entity may have. Not recording any amount does not reflect the obligation at all and could mislead stakeholders regarding the true financial position of the entity. Thus, utilizing the average amount is the most logical and appropriate choice in this context.