iv. Refer to additional information (8), based on relevant accounting standards, explain the appropriate accounting treatments for the transaction.

8. In March 2017, the company enter into a contract with a chicken supplier - Ayam Organik Sdn Bhd to ensure the supply of chicken is not interrupted. However, in May 2019, Ayam Organik Sdn Bhd was sued by the authority due to the farm hygiene issues. As a result, Ayam Organik Sdn Bhd has received negative publicity from the public which also affects Laguna Bhd indirectly. Due to that, the company decided to terminate the contract with Ayam Organik Sdn Bhd on 1 June 2019. On that date, the contract had remaining 9 months. Based on the agreement, Laguna Bhd must place a minimum monthly order of RM25,000 and in the event of the agreement being terminated earlier than its terms, the supplier is entitled for a compensation of RM150,000 for the contract that still has 6 to 9 months 4 remaining terms. As at 30 June 2019, no record has been made for this transaction