Reference no: EM133007050

ABC Bhd. (ABC) is a listed company that sells excavators and tower cranes. For the year ended 30 April 2021, its annual reports were authorised for publication by its directors on 31 July 2021. The following material events took place after the year end of 30 April 2021:

(a) ABC entered into a negotiation to buy 45 percent of the equity shares of EFG Bhd. from its controlling shareholder, XYZ Bhd., on 31 May 2021. Under the acquisition terms, ABC would have joint control with XYZ Bhd. over the daily operations of EFG Bhd. The agreement is expected to be completed by 31 July 2021.

(b) ABC filed a court case against a supplier in November 2020 for breach of contract and the supplier had disputed the case. On 11 July 2021 the court ruled that the supplier is liable for the amount of ABC's claim. The supplier has a right to appeal against the court decision to a higher court and has indicated its intention to do so.

(c) On 30 April 2021, ABC has 20 units of excavators costing RM200,000 each in its inventories. On 20 August 2021, new regulations enforced by the government have forced the selling price of excavators to drop to just RM110,000 each.

(d) On 13 July 2021, the directors of ABC have decided to discontinue the tower crane division's business due to the Covid-19 pandemic. The announcement was made on 15 July 2021.

(e) ABC sold an excavator to OPQ Bhd. (OPQ) on 9 April 2021. On 10 July 2021, Mark was declared bankrupt and the liquidator has announced that QOP's assets are sufficient to repay all debts and payment will be made within 90 days.

Required:

Problem 1: In accordance with IAS 10/ MFRS 110 Events after the Reporting Period, discuss how each of the above material events should be dealt with in the financial statements of ABC Bhd. for the year ended 30 April 2021.