Question 1 DESA BHD is listed company engaged in providing brokerage services in Kuala Lumpur and Bangkok. The External Auditor has raised several issues that need to be addressed by DESA BHD as follows: a) During the year, one of its clients has sued DESA BHD claiming that one of the employees has not acted according to the directions which resulted in a loss of RM500,000. The phone call records provide evidence that the employee has not acted according to the directions. DESA BHD has started negotiations for out of court settlement but the client is insisting for full claim. The company has not provided for the litigation cost at the year end. b) Due to severe losses and low volumes on stock markets, the board of directors has decided to close down the office at Bangkok Stock Exchange and to make redundant all the employees of the office. The plan has however, not been announce by the year end and the he estimated cost of redundancy is RM200,000. c) DESA BHD has taken loan from a local bank of RM800,000 using its investment in shares as collateral. Due to heavy losses, DESA BHD has made a default in payment of interest and principal repayment. The bank has transferred the shares and have filed suit for recovery of the balance amount. DESA has not derecognized the investments and loan stands at the original value of RM800,000. Required: As the chief accountant of DESA BHD, you need to provide the explanation of how you are going to account for these events and the required disclosure in the financial statement in accordance to FRS 137. (15 marks)