Question 1 The objective of IAS 37/MFRS 137 Provisions, Contingent Liabilities and Contingent Assets is to ensure that appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities and contingent assets and that sufficient information is disclosed in the notes to the financial statements to enable users to understand their nature, timing and amount The following cases are independent of one another. The draft financial statements for the year ended 31 July 2021 of the companies listed below have not include the following transactions 1. The directors of Ant Bhd. have proposed a dividend payout amounting to RM5.8 million on 29 July 2021. (3 marks) 2. In June 2020, Baker Bhd. (Baker) had appointed a contractor to renovate one of its outlets. The contractor had done a lousy job and had refused to rectify the problems. On end of February 2021, Baker had sued the contractor claiming RM40,000. The lawyer believed that there is a probable chance that this claim against the contractor is likely to succeed and Baker would win RM35,000 (3 marks) 3. Columba Bhd. (Columba) has a policy of refunding its customers if they retum goods within 30 days from the date of their purchase. From past experience, Columba estimates that such returns usually amount to 1% of sales. Sales in the month of July 2021 were RM1,200,000. All sales made were credited to the Revenue account when they occur. (3 marks) 4. In 2019, Sawyer Bhd. (Sawyer) rented a part of a building as one of its outlets. However, this outlet has been consistently making losses and it was closed on 31 July 2021. The lease on this building will continue for another three years at RM100,000 per annum. It cannot be cancelled and it cannot be re-let to another user. The company's cost of capital is 8%. The penalty for cancelling the contract is RM200,000. (4 marks) Required: : In accordance with IAS 37/MFRS 137 Provisions, Contingent Liabilities and Contingent Assets, explain the accounting treatment that each company should take in relation to the scenarios given in its preparation of financial statements for the year ended 31 July 2021. [Total: 13 marks]