RM'000

Freehold land at valuation as at 1 January 2019 30,000

Building at cost as at 1 January 2019 15,000

Equipment at cost as at 1 January 2019 3,405

Accumulated depreciation as at 1 January 2019:

Building 1,500

Equipment 681

Investment property 4,328

Development cost 6,600

Ordinary shares of RM1.00 each 30,000

Retained earnings as at 1 January 2019 8,850

Share premium 4,500

Asset revaluation reserve 2,000

5% Debentures 6,000

Trade receivables 432

payables 500

Deferred tax 120

Bank 1,407

Inventories 1,207

Tax paid 888

Sales 26,669

Cost of sales 8,047

Dividend received 24

Interim dividend paid 338

Administrative expenses 6,513

Distribution expenses 2,466

Finance cost 250

Accruals 27

Additional information:

1. The land is revalued every three years and the balance in the asset revaluation reserve is related to the previous years' revaluation. Current year revaluation showed a decrease of RM0.5 million in the value of the land and this has not been recorded.

2. As at year end, Orchid Bunga Bhd has provided a 10% allowance for doubtful debt to one of its receivables, Komi Bhd for a debt amount of RM45,000. However, on 15 January 2020, Komi Bhd was declared a bankrupt and none of the amount due to the company is recoverable.

3. Orchid Bunga Bhd was under litigation when one of its employee sued the company due to serious injury at work. Hence, a contingent liability was recognised as at year end. However, on 6 January 2020, the case came to court and the judgment was in favour of the employee which required the company to pay RM500,000 for the damage.

4. A class of inventory of Orchid Bunga Bhd has been valued at RM280,000 when the net realizable value was RM325,000. On 2 January 2020, the inventory was sold only at RM265,200 due to the recent product introduced by a competitor.

5. It is the policy of the company to depreciate its building over 50 years on a yearly basis. Equipment is depreciated over 10 years based on period of ownership.

Depreciation expense is to be included as part of the administrative expenses.

6. Included in the total development cost was RM200,000 incurred in relation to research expense during the year ended 31 December 2019.

7. The tax expense for the year was RM250,000. This amount did not include an increase in the deferred tax liability. The deferred tax liability was determined to be RM130,000 as at 31 December 2019. The income tax rate is 25%.

8. The investment property is measured based on the fair value model. The fair value is estimated at RM4,900,000 as at 31 December 2019.

What is the accounting treatment for this information based on data above?