The 30 June 2021 financial statements of Beach Ltd have been prepared in draft form. The accounts have not yet been printed and sent to shareholders. Subsequent to the reporting date of 30 June 2021, the following events occur:

1. On 17 July 2021, Beach Ltd.s main machinery was destroyed during flood. Insurance will cover the replacement of the machinery but lost sales representing $100,000 in profits are not covered.

2. Beach Ltd has created in the drafted financial statement a provision for damages of $600,000 assuming a 60% probability that it will lose a legal case. On 10 July 2021, the court decided that Beach Ltd lost the legal case and should pay $1 million for damages caused.

Required:

Classify the above events into adjusting and non-adjusting after reporting period events, justify your choice in accordance with AASB 110 Events after the Reporting Period and discuss the appropriate accounting and reporting treatments. Journal entries must be provided if the adjustment is required. All the transactions above are material.