AB Ltd engaged in manufacturing facility and has year-end of 31 December2019. Its date of authorization of financial statements for issue was 10February 2020 and the annual general meeting is scheduled on 7 March 2020.The following events occurred as follows:(1)The company's major warehouse and the inventory it contained, wascompletely damaged because of a fire explosion took place on 12January 2020. The warehouse and the inventory were to have acarrying value of RM20 million and RM12 million respectively on thisdate. The company is expected to recover up to maximum of RM18million as it has not updated its insurance cover. The operations of theentity were severally interrupted and the entity expects to face lossesfor coming few years.(2)A particular type of inventory held by AB Ltd at a different locationwas recorded at its cost of RM920,000 at 31 December 2019 in thestatement of financial position. The entity sold 70% of this inventoryfor RM560,000 on 15 January 2020, incurring a commission expenseof 15% of the selling price of the inventory.(3)The government introduced tax changes on 13 March 2020, due towhich the tax liability recorded by entity at 31 December 2019, willincrease by RM960,000.

Answers are as per the data given. Loss from the operations cannot be exactly calculated but yes an…

Answered: AB Ltd engaged in manufacturing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject :- Accounting
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