ABC entered a pre-sale contract with an investor who is entitled to a 10% discount on the token price at the Initial Coin Offering (ICO). On 1 March 2021. This investor paid ABC RM500,000 in cash. The ICO was issued on 30 April 2021. The cash is refundable if the ICO failed before 30 April 2021 since the minimum funding sum of RM4.5millionhas yet to achieve.

Immediately after the tokens are issued, ICO investors can readily change them into cryptocurrencies or cash via ABC's platform. This platform supports the purchase and sale of tokens, but it does not entitle the holder to future goods or services from ABC.ABC used the inflow received from the sale of tokens to finance the future development of the payment platform and other projects.

To increase the ICO investment, ABC committed to the token holders to make one payment of 10% of any annual profit for the year ended 31 March 2022. The holders do not entitle to any other rights such as redemption of their tokens or any residual interest in ABC’s assets.

On 30 April 2021, ABC raised RM5 million for the ICO.

You are required to:

(a) propose how to account for the RM500,000 in the ABC’s financial statement for the year ended 31 March 2021, and

(b) propose how to account for the RM5 million in the ABC’s financial statement for the year ended 31 March 2022.

Format:

1.Brief relevant discussion on: Key definition, Recognition, Measurement & Disclosure/Presentation of IAS32 & IAS37.

2. Propose how ABC can account for the above transactions in accordance with the above IASs.