KMC Sdn. Bhd. (KMC) provides a warranty for its product sold to the customers. The warranty provides assurance that the product complies with the agreed-upon specification and will operate as promised for one year from the date of purchase. Based on past experience, it is probable that there will be some claims under the warranties. KMC also has a policy of refunding purchases by dissatisfied customers. KMC did not display the refund policy on the sales invoice or receipt. However, KMCs policy of making refunds is generally known. KMC has a machine that needs to have its engine replace every three years for a technical reason. KMC uses this machine to produce goods for two years, and KMC is planning to replace the engine in the next financial year. Required: Discuss the appropriate accounting treatment for the transactions that occur in KMC in accordance with IAS 37/ MFRS 137 Provision, Contingent Liabilities and Contingent Assets. (15 marks)