Pleaseprovidesomerecommendationonthefollowing issueswithappropriateaccounting treatments as per the Australian Accounting Standard.

1. Asatthebeginningofthecurrentfinancialyear2024,HighLtdhastwoprovisionaccounts:
   1. Provisionforlawsuitclaims$14m,and
   2. Provisionforwarranty$29m.

Duringtheyearended30June2024,thelawsuitclaimsweresettledat $16mand warranty costs of $32m were paid. We would like to increase the warranty provision to $39m at year end in tandem with the increase in products sold during the year.

Pleaseprovidejournalentries(ifany) that weshouldmakefor30June2024toprepare our annual report. Please show all workings (settlement of the lawsuit claims and increase of warranty provision).

1. HighLtdistheprimarycontractorresponsibleforconstructingapowerplantforThaiLid.Ithas been discovered that there are defects in the construction of the power plant. The estimated cost to fix these defects is $100m. It had previously recognised a provision for warranty of

$40m on the project as part of project costs. However, High Ltd believes it can recover a substantial part of the costs from the subcontractors who performed some of the construction works.Negotiationswiththesesubcontractorsareongoing,andsofar,onlytwosubcontractors have accepted liability. The amount of reimbursement that is considered virtually certain is estimated to be $10m.

Canyouexplainwith journalentrieshowHighLtd shallaccountfortheaboveestimatesof costs and reimbursements? What would be criteria for recording such liabilities?

1. The ice cream factory located in Thailand has been incurring losses for the past 3 years. Management is contemplating the option of either restructuring the plant or selling it to an externalparty.Managementbelievesthatlosseswillcontinueforanother2yearsatabout

$30m per year before the business operation could turnaround. At year end, neither the restructuring plan nor the plan to sell was finalised.The carrying amount of the net assets of theplantatyearendwas $400m.Basedonitscurrentcondition,therecoverableamountofthe plant was estimated at $350m.

Canyouexplaintheaccountingtreatmentthatshallbeaccordedtotheabovecase,shallwe record provision liabilities?

1. On18March2024,theBoardofDirectorsofthecompanydecidedtoclosedownthe chocolate making products plant. On 25 May 2024, a detailed plan for closing down the plant was agreed by the Board; letters were sent to customers warning them to seek an alternative source of supply and redundancy notices were sent to the staff of the plant. The carrying amount of the netassetsof theplantis $20m. Thenetproceeds from selling the individualassetsandsettling the liabilities is $12m.

Othercostsexpectedtobeincurredare asfollows.

• terminationcostsof $2m (changesinmanagementstructurecosts),
• coststosellalineofbusiness $3m,
• staffrelocationcosts$1.2m,
• staffretrainingcosts$1.4m and
• expectedadditionaloperatingcostsforthefirstquarterof2025financialyear$8m.

Theclosureoftheplantisexpectedtobecompletedby 25 August2024.Thecompany'syear- end is 30 June.

Canyoupleaseexplain,withreasons, whethertheclosureoftheplantshallberecognisedin the financial statements of 2024. Also, state the amount of provision, if any, which shall be recognised in its financial statements.