PART G: The following scenario relates to questions 14 to 15. On 5 July 2020, the directors of Arrow Ltd (Arrow) are due to consider the authorisation of the company's financial statements for issue for the year ended 30 April 2020. The following transactions have not yet been dealt with fully: (1) On 5 April 2020, Arrow suffered a chemical leak at one of the bottling plants and there is currently an investigation into the potential damages this caused to a nearby river and surrounding area. The investigation is at an early stage and it is not yet clear whether Arrow Arrow's lawyers have estimated that, in their opinion, Arrow is likely to lose the case. No obligation has been recorded because the amount of potential damages could not be measured with sufficient reliability at the accounting year end. However, the lawyers have given a range of possible estimates of between $7,000 and $13 million. The case is due to be decided by 31 July 2020. (2) There is a claim for wrongful dismissal made by a former director against Arrow in February 2020. The case is due to come to court shortly after the annual general meeting. Arrow's lawyers believe that the former director has a strong case and that the claim is likely to be settled in his favour. Lawyers' estimates of probabilities of damages payable are zero (10%), $550,000 (60%), $750,000 (20%) and $1 million (10%) respectively. The case is due to be decided by 13 August 2020. (3) Due to the pandemic, Arrow vacated a property on 30 April 2020 which it rents under a lease contract. The terms of the lease do not allow Arrow to sub-let the property. The property has an annual rent of $20,000, paid in arrears, and the lease expires on 30 April 2021. The $20,000 rent for the year ended 30 April 2020 was paid by Arrow on time. Based on Arrow's current plan, it is highly unlikely that it will have any possible use of this property until the lease expiry date. An appropriate discount rate of 7%. Required: Q14: Discuss the definition of provision and contingent liabilities as per HKAS 37 'Provisions, Contingent Liabilities and Contingent Assets'. (5 marks) Q15: Discuss the effect of the above three transactions on the financial statements of Arrow at 30 April 2020 with reference to HKAS 37. You are not required to prepare any journal entries. (8 marks)