accounting treatments
Sid Berhad year end is 31 December 2020. The accountant of Sid Berhad has asked for your opinion on the accounting treatment of the following items:
(iii) During the year, Sid Bhd received a claim for RM1 million from one of its workers, Daniel. Daniel is now paralysed with head injuries after metal scaffolding that was under construction collapsed at building site. The insurance company refused to meet the claim on the ground that Daniel was found not wearing a protective helmet at the time of accident. In the opinion of Sid’s legal advisor, the company would have to settle the claim between RM100,000 to RM400,000, depending on whether the paralysis is temporary or permanent. The medical opinion is that there is a 20% chance that the paralysis will be permanent.
Required:
Advise Sid Berhad’s accountant on the accounting treatments for all the above- mentioned items. Your answer shall make reference to relevant MFRS Standards.
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