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dear tutors, please answer the below question according to the marks given. Thank you Limau Berhad has a financial year ending 31 Dec 2021. (c)
dear tutors, please answer the below question according to the marks given. Thank you
(c) Limau Bhd sold goods with a warranty where customers are covered for cost of repairs due to manufacturing defects within the first year after purchase. If major defects were detected in all products sold, repair costs of RM2 million would result. Limau Bhd estimated that the probability of goods sold with major defects will be 25%. (5 marks) (d) Limau Bhd was sued by a customer for RM3 million for breach of contract. Limau Bhd had obtained legal opinion that it was not probable Limau Bhd would lose the case. Accordingly, Limau Bhd had provided RM400,000 which was included in administration expenses. The unrecoverable legal costs of defending the action were estimated at RM500,000. However this amount had not been provided for as the legal action would only go to court in 2022 Limau Berhad has a financial year ending 31 Dec 2021.
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