The following three scenarios are mutually exclusive Assume that all the firms described in the scenarios adopt SFRSs JHI Engineering Pte Ltd (JHI) has been served a legal notice on 15 November 20Xl by the local building authority to fit smoke detection and sprinkling system in its factory on or before 31 July 20X2 failing which the company would face a fine of $20,000 The cost of fitting such a system is estimated at $190,000 Examine and explain how JHI should treat this in its financial statements for the year ended 31 December 20X1 The board of directors of KLM Pte Ltd (KLM) has decided on 18 December 20X1 to close its factory in Malaysia and move it to Vietnam The decision was based on a detailed formal plan of re structuring as required by FRS 37 Provisions, Contingent Liabilities and Contingent Assets The decision was conveyed to the management personnel at the headquarters in Germany The cost of restructuring the operation in Malaysia as per the plan was $700,000 Illustrate and explain how KLM should treat this re structuring in its financial statements for the year ended 31 December 20X1 The financial statements of PLC Pte Ltd had been completed but not yet released to shareholders The closing inventory of PLC Pte Ltd amounted to $332,000 as at 31 December 20X1, its financial year end This total included two products with the following information 150 units of Product A were carried at a cost of $12 each On 2 January 20X2, they were sold for $9 each, with total selling expenses of $100 300 units of Product B were carried at a cost of $15 each The products were found to be defective on 31 December 20X1 On 2 January 20X2, remedial work was conducted and cost $700 and shortly after, they were then sold for $20 each The selling expenses were $250 Illustrate and explain the accounting treatment by PLC Pte Ltd for the above

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The following three scenarios are mutually exclusive. Assume that all the firms described in the scenarios adopt SFRSs.

JHI Engineering Pte Ltd (JHI) has been served a legal notice on 15 November 20Xl by the local building authority to fit smoke detection and sprinkling system in its factory on or before 31 July 20X2 failing which the company would face a fine of $20,000. The cost of fitting such a system is estimated at $190,000.

Examine and explain how JHI should treat this in its financial statements for the year ended 31 December 20X1.

The board of directors of KLM Pte Ltd (KLM) has decided on 18 December 20X1 to close its factory in Malaysia and move it to Vietnam. The decision was based on a detailed formal plan of re-structuring as required by FRS 37 Provisions, Contingent Liabilities and Contingent Assets. The decision was conveyed to the management personnel at the headquarters in Germany. The cost of restructuring the operation in Malaysia as per the plan was $700,000.

Illustrate and explain how KLM should treat this re-structuring in its financial statements for the year ended 31 December 20X1.

The financial statements of PLC Pte Ltd had been completed but not yet released to shareholders. The closing inventory of PLC Pte Ltd amounted to $332,000 as at 31 December 20X1, its financial year-end. This total included two products with the following information:

150 units of Product A were carried at a cost of $12 each. On 2 January 20X2, they were sold for $9 each, with total selling expenses of $100

300 units of Product B were carried at a cost of $15 each. The products were found to be defective on 31 December 20X1. On 2 January 20X2, remedial work was conducted and cost $700 and shortly after, they were then sold for $20 each. The selling expenses were $250.

Illustrate and explain the accounting treatment by PLC Pte Ltd for the above.