The following separate situations exist. No entries have been made in the respective accounting records.

i) BQT Berhad is facing a lawsuit from a rival firm for patent infringement. BQTs legal department thinks that the rival firm has a strong case, and the business estimates a RM2 million loss if the firm loses the case.

ii) Bicycle Seats Sdn Bhd offers a three-year warranty on bicycle seats, which cost RM50 each. If the firm manufactures 1,000 bicycle seats in a year and offers a warranty per seat, the firm needs to estimate the number of seats that may be returned under warranty each year. The company forecasts that 200 seats must be replaced under warranty over the three year period.

iii) PFF Sdn Bhd declared a common stock dividend of 5,000 shares with a par value of RM5,000,000 of its common stock, payable in February, to the common shareholders on record at December 30.

Required: a) State the specific audit procedures which will be relevant for each of the above individual situations.

b) Describe the various adjusting entries or methods of disclosure which could be made in the financial statements for each of the above three situations.