detailed calculations are missing from the solution provided

Dear Sir$/$Madam

I am writing to seek your advice regarding numerous accounting issues for the year ended $30$ June $2024.$ Our senior accountant is on indefinite sick leave and we require your services. I have included following items that we require for your completion. All work must comply with the Australian Accounting Standards and please also provide a detailed explanation of the rationale behind the appropriate accounting treatments.

The items of concern are as follows:

Item $1$

The following information is financial statements of High Ltd for the year ended $30$ June $2024.$

Income statement of High Ltd for the year ended $30$ June $2024$

$$\text{'}000$

$$\text{'}000$

Sales

$927$

Interest revenue

$11$

Dividend revenue

$5$

Total Income

$943$

Less Expenses

Cost of Sales

$320$

Other expenses $($paid$)$

$15$

Bad debts expenses

$7$

Wages expense

$266$

Interest expense

$14$

Depreciation $-$ plant

$95$

Loss of sale of plant

$10$

$(727)$

Profit before income tax

$216$

Less income tax expenses

$(74)$

Profit for the year

$142$

Kaplan Business School Assessment $3$ Case Study

Statement of financial position of High Ltd as at $30$ June $2023$ and $2024$

$2023$

$2024$

Current assets

$$\text{'}000$

$$\text{'}000$

Deposits at call

$131$

$277$

Trade receivable

$221$

$253$

Less allowance for bad debts

$(11)$

$(8)$

Interest receivable

$20$

$15$

Inventories

$285$

$335$

Non$-$current assets

Loan receivable

$40$

$40$

Plant at cost

$1760$

$2115$

Less accumulated depreciation

$(230)$

$(295)$

Current liabilities

Trade payables

$90$

$100$

Accruals

$20$

$30$

Tax payables

$45$

$74$

Bank overdraft

$80$

$65$

Non$-$current liabilities

Convertible notes

$300$

Shareholders$$ equity

Issued capital

$1556$

$2256$

Retained earnings

$125$

$207$

Other information

$1)$

For the purposes of the statement of cash flows, High Ltd defines cash and cash equivalents as including cash on hand and at bank and short$-$term deposits at call, net of outstanding bank overdrafts.

$2)$

During the reporting period, High Ltd made two issues of ordinary shares as follows:

$$

the convertible notes outstanding at $30$ June $2024$ were converted to $150000$ ordinary shares issued at a conversion price of $$2\mathrm{.}00$ per share; and

$$

$200000$ shares were issued at $$2\mathrm{.}00$ per share for cash.

$3)$

During the year ended $30$ June $2024,$ plant and equipment costing $$60000$ and having a book value of $$30000$ was sold and made a loss of $$10000.$

$4)$

The opening and closing balances of the $$accruals$$ accounts $($under current liabilities$)$ were attributable to wages and salaries and interest payable as follows:

Kaplan Business School Assessment $3$ Case Study

Wages and Salaries

Interest

Opening at $1/7/2023$

$$5,000$

$$15,000$

Closing at $30/6/2024$

$$10,000$

$$20,000$

$5)$

The company had access to bank overdraft facilities of up to a maximum of $$100000.$ The bank overdrafts were payable on demand and were subject to annual review.

$6)$

The accounting policy of High Ltd was to disclose interest received and dividends received as investing activities.

Please prepare a statement of cash flows for High Ltd using the direct method. Additionally, include the note sections for cash and cash equivalents and provide a reconciliation of profit for the period to net cash flows from operating activities.

Item $2$

Please provide some recommendation on the following issues with appropriate accounting treatments as per the Australian Accounting Standard.

$1)$

As at the beginning of the current financial year $2024,$ High Ltd has two provision accounts:

$($a$)$

Provision for lawsuit claims $$14$m$,$ and

$($b$)$

Provision for warranty $$29$m$.$

During the year ended $30$ June $2024,$ the lawsuit claims were settled at $$16$m and warranty costs of $$32$m were paid. We would like to increase the warranty provision to $$39$m at year end in tandem with the increase in products sold during the year.

Please provide journal entries $($if any$)$ that we should make for $30$ June $2024$ to prepare our annual report. Please show all workings $($settlement of the lawsuit claims and increase of warranty provision$).$

$2)$

High Ltd is the primary contractor responsible for constructing a power plant for Thai Lid. It has been discovered that there are defects in the construction of the power plant. The estimated cost to fix these defects is $$100$m$.$ It had previously recognised a provision for warranty of $$40$m on the project as part of project costs. However, High Ltd believes it can recover a substantial part of the costs from the subcontractors who performed some of the construction works. Negotiations with these subcontractors are ongoing, and so far, only two subcontractors have accepted liability. The amount of reimbursement that is considered virtually certain is estimated to be $$10$m$.$

Kaplan Business School Assessment $3$ Case Study

Can you explain with journal entries how High Ltd shall account for the above estimates of costs and reimbursements? What would be criteria for recording such liabilities?

$3)$

The ice cream factory located in Thailand has been incurring losses for the past $3$ years. Management is cont