Southern Cross Healthcare Group (SCHG) Southern Cross Healthcare Group (SCHG) is the parent company of a group that designs and markets pharmaceutical products and systems for use in respiratory care, acute care, and the treatment of disruptive sleep behaviors. SCHG is based in New Zealand and its products and systems are sold locally as well as internationally. The group includes a wholly- owned subsidiary Southern Cross Hospitals. The following are some major transactions that occurred during the financial year 01.01.2019 to 31.12.2019. A newly recruited accountant of SCHG is having concerns about how to account for those transactions. You have been asked to assist the accountant in correctly recording the transactions. Transaction 3: Event 1: In February 2019 the directors of SCHG suspended the managing director, Maxwell, for misconduct. At a disciplinary hearing held by the company on 17 March 2019, it was decided Maxwell's salary should stop from that date and no redundancy payment should be made. Maxwell has made a complaint for unfair dismissal and is taking legal action against the company to claim compensation for wrongful dismissal. Maxwell says he has a service contract with the company which would entitle him to two years' salary at the date of dismissal. Event 2: Just before the year-end, a Jarge oumber of complaints were received by SCHG about patients becoming ill after using an allergy medication. The patients have taken legal action against the local pharmacies and the local pharmacies have taken action against SCHG. At the reporting date, the public health authorities have not completed their investigations. Lawyers for HCHG say informally that the outcome of the investigations is 'going well for SCHG Ltd but refuse to confirm this in writing. Required: Determine the accounting treatment for Event I and Event 2 applying NZ IAS 37 Provisions, Contingent Liabilities, and contingent Assets. (5 marks) Southern Cross Healthcare Group (SCHG) Southern Cross Healthcare Group (SCHG) is the parent company of a group that designs and markets pharmaceutical products and systems for use in respiratory care, acute care, and the treatment of disruptive sleep behaviors. SCHG is based in New Zealand and its products and systems are sold locally as well as internationally. The group includes a wholly- owned subsidiary Southern Cross Hospitals. The following are some major transactions that occurred during the financial year 01.01.2019 to 31.12.2019. A newly recruited accountant of SCHG is having concerns about how to account for those transactions. You have been asked to assist the accountant in correctly recording the transactions. Transaction 3: Event 1: In February 2019 the directors of SCHG suspended the managing director, Maxwell, for misconduct. At a disciplinary hearing held by the company on 17 March 2019, it was decided Maxwell's salary should stop from that date and no redundancy payment should be made. Maxwell has made a complaint for unfair dismissal and is taking legal action against the company to claim compensation for wrongful dismissal. Maxwell says he has a service contract with the company which would entitle him to two years' salary at the date of dismissal. Event 2: Just before the year-end, a Jarge oumber of complaints were received by SCHG about patients becoming ill after using an allergy medication. The patients have taken legal action against the local pharmacies and the local pharmacies have taken action against SCHG. At the reporting date, the public health authorities have not completed their investigations. Lawyers for HCHG say informally that the outcome of the investigations is 'going well for SCHG Ltd but refuse to confirm this in writing. Required: Determine the accounting treatment for Event I and Event 2 applying NZ IAS 37 Provisions, Contingent Liabilities, and contingent Assets
