QUESTION 05 10 MARKS Phantom Property Ltd (PPL) is a property development company with a balance date of 31 March. During the preparation of the 31 March 2020 financial statements, a number of issues have come to light. The details of these issues are as follows: (a) During the year ended 31 March 2020, PPL's accountant was informed of a claim relating to water tight issues by the residents of a city apartment building. PPL's maintenance team (after many attempts) have rectified the problems after many attempts. However the residents are claiming for damages associated with serious inconvenience and alternative accommodation costs totalling $250,000. PPL's lawyers have advised that the claim should be settled out of court for approximately half the claimed amount in order to avoid adverse publicity of a 'messy court case. Required Determine how PPL should treat the above in its financial statements for the year ended 31 March 2020. Include in your answer the amount (if any), a journal entry (if any) or any disclosure required. (5 marks) (b) A former employee, Mr Ram Peters, ceased employment with PPL on 1 March 2020 following a disagreement with one of the directors of the company. The following week, on 8h March 2020, Mr Peters lodged a complaint of wrongful dismissal with the Employment Tribunal and is seeking compensation from the company. PPL's lawyers haven't investigated the issue yet. The date for the hearing to award damages has not yet been set and the parties haven't agreed on a compensation settlement yet. Required Determine how PPL should treat the above in its financial statements for the year ended 31 March 2020. Include in your answer the amount (if any), a journal entry (if any) or any disclosure required. (5 marks) Round all amounts to the nearest dollar. QUESTION 05 10 MARKS Phantom Property Ltd (PPL) is a property development company with a balance date of 31 March. During the preparation of the 31 March 2020 financial statements, a number of issues have come to light. The details of these issues are as follows: (a) During the year ended 31 March 2020, PPL's accountant was informed of a claim relating to water tight issues by the residents of a city apartment building. PPL's maintenance team (after many attempts) have rectified the problems after many attempts. However the residents are claiming for damages associated with serious inconvenience and alternative accommodation costs totalling $250,000. PPL's lawyers have advised that the claim should be settled out of court for approximately half the claimed amount in order to avoid adverse publicity of a 'messy court case. Required Determine how PPL should treat the above in its financial statements for the year ended 31 March 2020. Include in your answer the amount (if any), a journal entry (if any) or any disclosure required. (5 marks) (b) A former employee, Mr Ram Peters, ceased employment with PPL on 1 March 2020 following a disagreement with one of the directors of the company. The following week, on 8h March 2020, Mr Peters lodged a complaint of wrongful dismissal with the Employment Tribunal and is seeking compensation from the company. PPL's lawyers haven't investigated the issue yet. The date for the hearing to award damages has not yet been set and the parties haven't agreed on a compensation settlement yet. Required Determine how PPL should treat the above in its financial statements for the year ended 31 March 2020. Include in your answer the amount (if any), a journal entry (if any) or any disclosure required. (5 marks) Round all amounts to the nearest dollar
