Mr. Bahari is the risk manager of MQA Bhd (MQA). One of Mr. Bahari's tasks is...

 

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Mr. Bahari is the risk manager of MQA Bhd (MQA). One of Mr. Bahari's tasks is to analyse and provide opinion on an issue pertaining to the company's litigation risk. Following is some of the pertinent information to be examined by him. On April 2020, MQA has introduced a new mountain bike model, the ZXR-15. The product was of high demand especially in the month of April to September 2020. However, due to the escalating demand by the customers which was unexpected by MQA, it was believed that the company has failed to ensure the quality and reliability of the product during the manufacturing process. As a consequence, 35 users have suffered from major and minor injuries which were believed due to the brake defects. Thus, on October 2020, a group of customers has filed a lawsuit of RM15 million against MQA for the lack of product safety which has jeopardised their safety and life. In fact, some of the users have suffered from permanent disability caused· by the defective mountain bike. On the recent internal investigations made in November 2020, it was clearly evidenced that the quality control unit has failed to conduct proper quality checking particularly on the brake functionality. Based on this evidence, the MQA's legal team advised that the probable outcome of the proceeding would be 95% unfavorable to MQA and it is most likely that the company will·lose the case and has to pay RM 15 million for the lawsuit settlement. The company accounting period ends on 31 December. → Advice Mr. Bahari on the right accounting treatment that should be taken regarding the lawsuit case for the year 2020 (provide justification(s)) (Generation of solution, evaluation and decision making). 3. -> 分节符(下一页): -> Mr. Bahari is the risk manager of MQA Bhd (MQA). One of Mr. Bahari's tasks is to analyse and provide opinion on an issue pertaining to the company's litigation risk. Following is some of the pertinent information to be examined by him. On April 2020, MQA has introduced a new mountain bike model, the ZXR-15. The product was of high demand especially in the month of April to September 2020. However, due to the escalating demand by the customers which was unexpected by MQA, it was believed that the company has failed to ensure the quality and reliability of the product during the manufacturing process. As a consequence, 35 users have suffered from major and minor injuries which were believed due to the brake defects. Thus, on October 2020, a group of customers has filed a lawsuit of RM15 million against MQA for the lack of product safety which has jeopardised their safety and life. In fact, some of the users have suffered from permanent disability caused· by the defective mountain bike. On the recent internal investigations made in November 2020, it was clearly evidenced that the quality control unit has failed to conduct proper quality checking particularly on the brake functionality. Based on this evidence, the MQA's legal team advised that the probable outcome of the proceeding would be 95% unfavorable to MQA and it is most likely that the company will·lose the case and has to pay RM 15 million for the lawsuit settlement. The company accounting period ends on 31 December. → Advice Mr. Bahari on the right accounting treatment that should be taken regarding the lawsuit case for the year 2020 (provide justification(s)) (Generation of solution, evaluation and decision making). 3. -> 分节符(下一页): ->