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i. Wayne is the new external auditor assigned to Client A, one of the Top 30 Malaysian PLCs on Bursa Malaysia. As a new auditor,

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i. Wayne is the new external auditor assigned to Client A, one of the Top 30 Malaysian PLCs on Bursa Malaysia. As a new auditor, he needs to explain to Client A that he found erroneous transactions related to MFRS 137 - Provisions, Contingent Liabilities and Contingent Assets recorded by the previous auditor in which Wayne now has to restate all the figures in the Annual Report and send it back to Bursa Malaysia for an amendment. As a new assistant to Wayne, you are to help him re-calculate the provisions for warranty of Client A which sold goods with a warranty under which customers are covered for the cost of repairs of any manufacturing defect that becomes apparent within the first six months of purchase. Client A's past experience and future expectations indicate the following pattern of likely repairs. % of goods sold 75 20 5 Defects None Minor Major Costs of repairs if all items suffered from these defects (RM) 0 1 million 4 million Required: Calculate the total cost of provisions chargeable to Client A as per MFRS 137 - Provisions, Contingent Liabilities and Contingent Assets (marks will be awarded for workings shown in detail) (7 marks)

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