Sometime in November 2021, a legal representative from one of its creditors, Mawar Bhd issued a legal letter. The content of the letter indicates that Mawar Bhd has filed a lawsuit against Comel Bhd for its failure to repay the bills of services that have been rendered to R &D company last year. Total amounts involved would be amounting to RM750,000. R&D Company Bhd has then consulted with the company's legal adviser, who is on the opinion that R& D company probably lose this case in court

Discuss the accounting treatment of the above situations in accordance to MFRS137 Provisions, Contingent Liabilities and Contingent Assets and prepare the journal entry for the above situation

Answer rating: 100% (QA)

In accordance with MFRS 137 Provisions Contingent Liabilities and Contingent Assets the company should recognise a provision for the legal expenses in... View the full answer