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Advise Mr Alex whether he has any action against Produksi Jitu Sdn Bhd. 2. Identify a remedy that will be available to Mr Alex.

Advise Mr Alex whether he has any action against Produksi Jitu Sdn Bhd. 2. Identify a remedy that will be available to Mr Alex.

FINANCIAL ACCOUNTING
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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1. Advise Mr Alex whether he has any action against Produksi Jitu Sdn Bhd. 2. Identify a remedy that will be available to Mr Alex.
Produksi Jitu Sdn Bhd produced a Malay film called 'Legenda Ratu Hijau: Puteri Saadong'. Mr Alex a cinema owner at Sungai Petani, negotiated with Produksi Jitu Sdn Bhd, regarding the rights to show that film for four weeks at RM500,000. Produksi Jitu’s Managing Director Mr Shahbani said the film was a real bargain with an extraordinary new visual experience since the film uses 3D-HD photography. Mr Shahbani showed Mr Alex a report that estimated the average takings of the film when shown at cinema in Shah Alam. Mr Alex read the report. It stated on average the film will make approximately RM600,000 per week. Mr Alex thought he might send his accountant to look at the accounts to verify the report, but decided not to. Mr Alex was impressed with what Mr Shahbani had said and in any event, he wanted to be the first cinema in his town to show 3D-HD film. Mr Alex purchase the rights to show the film at RM500,000. It turned out to be disaster. The photography was ordinary. At the time of released, three other 3D-HD films were released at the competitors' cinemas. Mr Alex made only RM100,000 per week over the four-week period. Later, Mr Alex got to know that the report shown to him, had been prepared by Mr Shahbani’s trainee accountant Dania. Dania got the figures wrong and the report should read the film will make approxiamately RM50,000 per węek,
Transcribed Image Text:Produksi Jitu Sdn Bhd produced a Malay film called 'Legenda Ratu Hijau: Puteri Saadong'. Mr Alex a cinema owner at Sungai Petani, negotiated with Produksi Jitu Sdn Bhd, regarding the rights to show that film for four weeks at RM500,000. Produksi Jitu’s Managing Director Mr Shahbani said the film was a real bargain with an extraordinary new visual experience since the film uses 3D-HD photography. Mr Shahbani showed Mr Alex a report that estimated the average takings of the film when shown at cinema in Shah Alam. Mr Alex read the report. It stated on average the film will make approximately RM600,000 per week. Mr Alex thought he might send his accountant to look at the accounts to verify the report, but decided not to. Mr Alex was impressed with what Mr Shahbani had said and in any event, he wanted to be the first cinema in his town to show 3D-HD film. Mr Alex purchase the rights to show the film at RM500,000. It turned out to be disaster. The photography was ordinary. At the time of released, three other 3D-HD films were released at the competitors' cinemas. Mr Alex made only RM100,000 per week over the four-week period. Later, Mr Alex got to know that the report shown to him, had been prepared by Mr Shahbani’s trainee accountant Dania. Dania got the figures wrong and the report should read the film will make approxiamately RM50,000 per węek,
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