Question 3 WATERFRONT PLC. Waterfront has a number of issues to attend to before preparation of financial statements for the year ended 30 June 2020: A. The government issued a Statutory Instrument to introduce new laws on data protection. The laws become effective on 1 September 2020. The directors of Waterfront have agreed that this will require a large number of staff to be retrained and on 15 June 2020 they commissioned a report that would identify the actual training requirements. B. At the end of the reporting period, Waterfront is negotiating with its insurance provider about the amount of an insurance claim that it had filed on 1 April 2020. On 31 May 2020, the insurance provider had agreed to pay K 35 000. C. A customer has sued Waterfront for damages alleged to have been caused by Waterfronts products. Waterfront is contesting the claim and, at 30 June 2020, the directors have been advised by legal advisers that the company is probably going to lose the case. The estimated compensation to all the customers who bought the products is K8 500. D. Waterfront has spent a total of K80 000 researching new cleaning chemicals, K30 000 of this was spent on 30 June 2019 on acquiring equipment for use in the research activities. Commercial production of the cleaning chemicals started in April 2020 after incurring development costs of K 120 000 They have also spent an additional K65 000 developing a new cleaning product . The product will not go into commercial production until April 2021. The development project meets the criteria laid out in IAS38 Intangible Assets. Required: a) Explain, providing reasons for each issue in A C, whether or not a provision should be made in the accounts in line with provisions of IAS 37. (15 marks) b) Explain how should the costs incurred in D would be treated in the financial statements of Waterfront plc for the year ended 30 June 2020? (10 March)