Case 5: You are an expert who deals with the transactions related to provisions, contingent assets, contingent liabilities and intangible assets. For each of the scenario mentioned below provide with an appropriate solution with accounting treatment, calculations and necessary comments: (4 x 2.5 marks each = 10 marks) 1. In December 2019 the board decided to close its magazine distribution division which will be a part of its major restructuring activity. In beginning of February 2020, the plans were announced to the staff. Such closure will result in an outflow of RO 250,000. 2. The company has filed a damage case against one of its supplier company of RO 30,000 for not supplying the quantity and quality of goods as per order. The chance so winning of the case by the company is probable. 3. The company manufactures a line of equipment which it sells to wholesalers. The company sold 50,000 items of this type this year, which also has a one-year guarantee if the equipment fails. Based on past experience, 5% of items sold are retumed for repair. In each case, 50% of the items returned are able to be repaired at a cost of RO 60, while the remaining need significant repair at a cost of RO 150. 4. During the year the company had incurred following costs to develop and produce a designing computer software as follows: RO 10,000 5,000 Cost incurred for detailed program design Cost incurred for coding and testing to evaluate technological feasibility Other cost incurred after establishment of technological feasibility: Coding cost: RO 8,000 Testing cost: RO 5,000 Product registration cost: RO 3,000 Duplication of software and training cost RO 35,000 Packaging cost RO 6,000 57,000 72,000