Punjab ple (Punjab) is a producer and distributor of tea. The company’s year-end is 31 December.

The directors of Punjab are due to sign the company’s financial statements for the year ended 31 December 2017 on 5 March 2018. The following information is available.

1. Flavoured tea is included in year-end inventory at its original cost of €120,000. Audit work carried out in February 2018 indicated that the tea was sold for €100,000 in January 2018 due to a fall in demand for such products during 2017.

2. During 2017 there had been industrial unrest amongst Punjab’s production workers following the automation of one of the manufacturing processes. Management had sought to make 20% of the workforce redundant. In February 2018, following protracted negotiations, it was agreed that 15% of the workforce would be made redundant at a cost of

€400,000.

3. On 31 January 2018, €250,000 was paid to Trevor Baggins as compensation for his removal as Marketing Director. Mr Baggins had been dismissed by the Chairman at the December 2017 Board meeting as a result of a serious disagreement over marketing strategy for 2018.

4. It was discovered in January 2018 that a long-serving employee had systematically stolen

€250,000 over the previous four years. Material errors had thus been made in the financial statements over those years and there is now no chance of recovery.

Requirement Explain briefly how each of the above transactions should be treated in the financial statements of Punjab for the year ended 31 December 2017.