QUESTION 3 Mahligai Bhd received a license to operate a bus service in Bandar Puncak Alam from the Selangor government. The license was granted for a period of 10 years starting from January 2018. No costs were incurred by Mahligai Bhd. The directors of Mahligai Bhd had valued the license to be worth at least RM6,000,000. In December 2019, one of company's buses was involved in a road accident. Fortunately, there were no passengers on board as the bus had already completed its routine trip by that late evening. However, the bus driver was injured. Discussion for compensation for hospital bills was made on 15 March 2020 for the first time between the directors and the bus driver, witnessed by the lawyers of both parties, but the compensation amount has not yet finalised on that date. Since it is stated in the employment contract related to reimbursement of hospital bills, the company's lawyers in the opinion that there is a possibility for the company will be held liable. As clearly stated in the insurance policy for such events, Mahligai Bhd will be able to recover in full the amount of the compensation from the insurance company once the compensation amount has been finalised and agreed upon by all the parties. The company would receive the reimbursement from the insurance company within two weeks after the payment to the recipient been made. The company's financial year end is on 30 June every year. Required: a. Explain the disclosure requirement of 'Contingent Liabilities' and 'Contingent Assets in accordance to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets (5 marks) b. Explain the classification of the license and the discussion for compensation" on 15 March 2020. (5 marks) c. Discuss the appropriate accounting treatments and disclosures in the financial statements once the compensation amount becomes probable and the reimbursement from the insurance company becomes virtually certain. (5 marks) d. Prepare relevant journal entries if a total compensation of RM60,000 has been agreed on 30 March 2020, and payment to the bus driver was made on 10 May 2020. (5 marks) (Total: 20 marks)