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4. Terrier plc You have recently been appointed as assistant to the financial director of Terrier plc, a manufacturing company. The financial director has asked you to help with the finalisation of the financial statements for the year ended 30 September 2019. There are two outstanding issues which still need to be resolved, which are as follows: II. During the year a legal claim was made against Terrier plc for poor quality goods delivered on 1 September 2019. This was due to the use of defective materials and represented a single occurrence. Terrier plc's legal department believe that the claim is likely to succeed and estimate an out of court settlement of 95,000. Terrier plc is making a counter claim of 25,000 against its supplier who provided the defective materials. The claim against the supplier is at an early stage and it has been assessed as possible that the claim will succeed. A provision was recognised at 30 September 2019 for the net amount of 70,000 (95,000 less 25,000). It is thought that the claim against Terrier plc will be settled in October 2021. The appropriate annual discount rate is 5%. Required: (a) Explain the required IFRS accounting treatment of the two issues above, preparing relevant calculations and discussing the impact, where appropriate, on the statement of profit or loss and statement of financial position for Terrier plc. (30 marks] (b) Explain how a contingent liability differs from a provision, and discuss how a contingent liability should be represented in the financial statements. (5 marks] [Q4. Total words limit: 800]