(c) An entity has been sued by a customer in respect of some products supplied, which the customer claims are faulty. The customer is suing for 200,000 plus costs. Court costs are likely to amount to 20,000. The entity's lawyer has advised that there is 80% chance that the case will be lost and that the full amount claimed will be payable. If the case is lost, it is highly likely that costs would be awarded against the company. The company is fully insured, and the lawyer has advised that it is probable that the insurance policy will cover the compensation payable to the customer. The directors require your advice on how to treat the above events in the entitys financial statements.

Required Advise the directors on the appropriate accounting treatment of the above events. (3 marks)

(d) Moorewills Ltd has decided to restructure its operations. The company is proposing to make a provision for restructuring costs, which is made up of the following items: Redundancy payments to employees 800,000 Legal advice relating to staff redundancies 35,000 Write-off of capitalised development projects to be abandoned 300,000 Re-training of staff retained 120,000 Expected profit on sale of land (60,000) The development project commenced in January 2019 but was suspended in March 2020 pending a decision on the restructuring. The restructuring was announced to staff on 20 December 2020 at which time a formal restructuring plan had been prepared. (3 marks)

Required Advise the directors of Moorewills on the appropriate accounting treatment of the restructuring costs in the financial statements for the year ended 31 December 2020.