2 Prima Bhd, a leading roofing and paint company, has been researching and developing a new product, Brito. Research activities started since 1 March 2015 and the costs incurred until 31 December 2016 were RM1,850,000. The product was developed and patented at a cost of RM12,000,000 during the year ended 31 December 2017. The recognition criteria for capitalisation of the development expenditures was met, and the product has been launched and on the market since 1 January 2018. The management expected sales for the 5 years to be 150,000 units per year, selling at RM20 per unit. Management also decided to amortize the development cost for 5 years. At the end of 2019, a new entrant into the industry marketed a similar product and at a much cheaper price, which disrupted the ability to achieve the projected sales of the product Brito. Prima revised its projected net sales for the following 3 years as follows: Year ending 31 Dec Estimated cash flows (RM) 2,000,000 2020 2021 2022 1,800,000 1,500,000 If Prima Bhd were to dispose the development cost, the fair value less cost to sell was RM5,100,000. Towards the end of 2020, a market survey revealed numerous complaints about the competitor's product, and sales of Brito was picking up. Prima Bhd was confident of recapturing the market and meeting again the expected sales of 150,000 units per year at RM20 per unit for the remaining 2 years, ending 31 December 2021 and 2022. The recoverable amount of the development cost was expected to be RM3,900,000. Prima Bhd's incremental borrowing rate is 10%. The present value interest factor for single sums and for annuity show: Year/Period (n) PVIF PVIFA 1 0.909 0.909 2 0.826. 1.735 3 0.752 2.487 4 5 0.683 3.170 0.621 3.791 Prima Bhd adopts the cost model for its intangible assets. Required: a) Briefly explain the accounting treatment of the costs incurred by Prima Bhd in accordance with the specific financial reporting standard applicable for the year ended 31 December 2016 and 31 December 2017. (5 marks) b) Calculate the impairment loss on 31 December 2019. Show journal entries to account for the loss. (7 marks) c) Calculate the additional impairment loss or reversal of impairment loss as at 31 December 2020. Show appropriate journal entries of the impairment loss or reversal of impairment loss. (7 marks) d) Show extracts of the Statement of Profit or Loss for the year ended 31 December 2019, and 2020. (4 marks) e) State the carrying amount of the development cost as would be presented in the Statement of Financial Position as at 31 December 2020. (2 marks) (Total: 25 marks)