On 20 October 2020, Loaf Bhd.(Loaf) signed an agreement to lease premises for its new shop for 10 years. The lease agreement requires Loaf to restore the premises to the original condition at the end of the lease. As at 31 December 2020, Loaf had already incurred RM500,000 in renovating and decorating the new shop. Loaf estimates that it will incur RM75,000 to restore the premises to the original condition. The board of directors of Loaf decided to close one of its branches in Sunway City. A board meeting was held on 1 October 2020, a detailed plan for closing down the branch was presented to the board. The plan was formalized and approved by the board at the meeting. On 5 November 2020, notices of branch closure were sent to customers, suppliers and staff. On 31 December 2020, Loaf estimated that the cost of closing the branch was at RM300,000 including staff retraining of RM60,000. The plan was implemented in January 2021. This branch was operating from a building that Loaf had leased under an operating lease until 30 June 2021. The operating lease on the building is non-cancellable. The annual rental is RM240,000, payable in advance.

Question:

1: Discuss the appropriate accounting treatment for the transactions that occur in Loaf in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets