Question Four Consider each of the following independent and material situations. In each case: the balance date is 30 June 20x8. - the financial report and audit report were signed on 12 August 20X8. - the financial report and audit report were mailed to the members on 20 August 20x8. (1) The Research and Development (R&D) division of your client Neptune Limited had developed a new type of photocopy paper, and the directors believed that the new photocopy paper would double their sales volume. Furthermore, Neptune Limited capitalised the development cost relating to the new photocopy paper in its 30 june financial reports. However, on 8 July 20X8 the granting of the application for a patent is rejected because a competitor had registered a similar patent in June. (ii) Your client, Outback Mining Limited, owns a mineral exploration licence in Central Australia. At 30 June this licence was valued by an independent expert at $50,000,000. This valuation is reflected in the financial report. On 8 August Outback Mining Limited received notice that a claim was being lodged under the Native Titles Act. If the daim is successful the exploration licence will be worthless. (iii) Your client, Gem Limited, made an out of court settlement on 1 August 20x8 of $300,000. The settlement related to a litigation case dating back 4 years. A provision of $150,000 was recorded in the 30 June 20X8 financial report. (iv) You are the auditor of Turbo Limited, a professional services client. On 15 August 20x8, Turbo Limited settled and paid personal injury claim to a former employee as a result of the accident that occurred in March 20X8. The company had not previously recorded a liability for the claim. (v) On 22 August 20X8, you discover that a debtor of your client, Galaxy Limited, was placed in liquidation on 16 August. The debtor owed $600,000 as at 30 June; a specific provision of $300,000 of this amount was made at this date. On very preliminary information, the likely payout to client is zero. Required: For each of the events described above, select the appropriate action from the list below and justify your response: A. Adjust the 30 June 20x8 financial report. B. Disclose the information in a note to the 30 June 20X8 financial report. C. Request the client recall the 30 June 20X8 financial report for revision. D. No action is required (Total Marks = 15 Marks) >