Makmur Gold Berhad (MGB) current year-end was 31 December 2020. MGBs financial statements were submitted to MGBs Audit Committee (AC) on 28 February 2021. The financial statements were then authorised for issue by MGBs board of directors on 16 March 2021 and the annual general meeting will be held on 1 April 2021. The following matters have been bought to your attention as the companys accountant.

1) MGB made a provision for doubtful debts of 2% and the amount provided for at the end of December 2020 was RM1,500,000. On 1 February 2021, a customer who owed ICB RM1 million become insolvent. 2) MGB factory building was damaged on 22 February 2021 due to flash flood in the area. The recoverable amount was estimated to be RM1.3 million. The carrying value as at 31 December 2020 stood at RM1.5 million. 3) On 1 October 2020 MGB purchased 150,000 shares (10%) of Elsa Manufacturing Berhad (EMB). The share price of EMB was valued at RM1.50 during purchased. In January 2021, EMBs share price stood at RM0.90. 4) On 18 April 2021, the government announced tax rate changes to 26% from existing 25%. The effect of the tax rate changes, MGBs deferred tax liability will increase by RM550,000 as at 31 December 2020. 5) MCB had provided for a contingent liability of RM425,000 during the year of 2020 but based on judgment made on 31 January 2021, ICB need to pay RM520,000 as damages to the other party.

Required: a) Classify independently each of the above five cases as adjusting events, non-adjusting events or none. You are required to justify your answers. (10 marks) b) Discuss the accounting entries that MGB should incorporate in MGBs financial statements for the year ended 31 December 2020. (10 marks) c) Illustrate the above adjustment in MGBs Statement of Financial Positions as at 31 December 2020. (5 marks) (Total: 25 Marks)