Discuss the accounting treatment of the events

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Reference no: EM132805031

Question - MultiDuo Bhd is a multinational company producing semiconductor product since 2000. The semiconductor products are exported to Middle East, Hong Kong and Taiwan. The financial year end of the company is 31 March 2018. The company's financial statements were authorised for issue by the board of directors on 30 June 2018. Following are among events that occurred in 2018.

1. On 15 June 2018, a flash flood destroyed one-third of a factory of MultiDuo Bhd and caused severe damaged to its semiconductor inventory. The carrying amounts of the factory and the inventory were RM20 million and RM5 million, respectively. The company is entitled to be reimbursed for the damages amounting RM15 million from insurance company.

2. The civil suit was brought against MultiDuo Bhd before the end of financial year. The lawyer advised the company that MultiDuo Bhd would lose the case and suffer a loss of RM1.5 million. On 25 May 2018, MultiDuo Bhd and the complainant agreed to settle it out of court and paid RM1 million.

REQUIRED - Discuss the accounting treatment of the above events in the financial statements in accordance to MFRS 110 Events After the Reporting Period.

Reference no: EM132805031

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