Styles 1 - 5 6 3. Adnan is the audit manager for the Elites Gyms LLC audit assignment for the 2018 audit. The audit revealed certain material misstatements with regard to leased assets. Adnan is concerned that Management's explanations do not reflect the nature of the transactions recorded and their appears to be a departure from IFRS basis of reporting. Both issues are consequential to the audit opinion. Two issues of concerns relate to: Finance lease is being treated as an operating lease that is simply being expensed. The lease is of 12 years duration and related costs are AED 36 million II. II. Elites Accounts Receivable appears to be over stated as a customer has ceased trading and gone in to liquidation owing Elite AED 2 million Management has not acted on Adnan' advice to make the recommended changes in the financial reports material misstatements. Required: a) Advise management the appropriate action needed and indicate the accounting entries that would be required to conform with IFRS/GAAP b) To briefly explain to the management of Elites Gyms LLC the possible audit report outcomes if they do not provide clarification to the relevant material misstatements