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Explain all the relevant accounting issues

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Question 1: Explain all the relevant accounting issues relating to the following events and determine how you would expect them to be included in Entity C's financial statements for the year ended 31 March 2020.

Division Two of Entity C manufactures and supplies one product. In April 2020, the company discovered a major design fault and decided to recall all the products sold in the year ended 31 March 2019 and 2020. Revenue for 2019 and 2020 was £1.3m and £2.7m respectively. There is no previous recall in Entity C's history and the directors are unsure for how long the refund period should last. A customer has issued a lawsuit against Entity C in early May claiming compensation for injury caused by the design fault.

Reference no: EM132569907

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