Assume you are an assistant to the financial director of Loodle plc. The company is a top manufacturing firm and the firm encountered some issues. There are some outstanding issues which still need to be resolved, which are as follows: I. On 1 April 2019 Loodle plc acquired a factory for 480,000. The factory has an estimated useful life of 20 years and is being depreciated on a straight-line basis. Loodle plc subsequently applied for a government grant of 240,000 towards the cost of the factory and this was received in April 2019. As there are no conditions attached to the grant, the financial controller credited the full 240,000 to other income. Depreciation was recognised in the period based on the full cost of the factory building. Loodle plc's accounting policy is to recognise government grants using the deferred income approach. II. During the year a legal claim was made against Loodle plc for poor quality goods delivered on 1 September 2019. This was due to the use of defective materials and represented a single occurrence. Loodle plc's legal department believe that the claim is likely to succeed and estimate an out of court settlement of 95,000. Loodle plc is making a counter claim of 25,000 against its supplier who provided the defective materials. The claim against the supplier is at an early stage and it has been assessed as possible that the claim will succeed. A provision was recognised at 30 September 2019 for the net amount of 70,000 (95,000 less 25,000). It is thought that the claim against Loodle plc will be settled in October 2021. The appropriate annual discount rate is 5%. (a) Explain the required IFRS accounting treatment of the two issues above, preparing relevant calculations and discussing the impact, where appropriate, on the statement of profit or loss and statement of financial position for Loodle plc. (b) Explain how a contingent liability differs from a provision, and discuss how a contingent liability should be represented in the financial statements