QUESTION 2 (Note: This question relates to Topic 6) Martin Ltd finalised its financial statements for the year ended 31 March 2021 and authorised them for issue on 28 May 2021. The new managing director is unsure about the treatment of the following material events and has asked for your professional advice. (i) 5 April 2021 - In October 2020, Computer Ltd, a supplier of Martin Ltd, initiated legal proceedings against Martin Ltd (for a breach of contract). After Martin Ltd sought legal advice, a contingent liability of $89 000 was disclosed in the notes at balance date. The court decision, delivered on 5 April 2021, decreed that Martin Ltd had to pay damages of $93 000 to Computer Ltd. (ii) 6 April 2021 - A dividend of $400 000 was declared on 26 February 2021 and paid on 6 April 2021. The total dividend payable at balance date was $400 000. (iii) 12 April 2021 - An investment of Martin Ltd, consisting of 36 000 shares in Drop Ltd, was measured at the balance date fair value of $3.85 per share. The Drop Ltd shares are now listed on the stock exchange at $1.22 per share. (iv) 15 April 2021 - The general ledger inventory account, on 31 March 2021, included items of inventory measured at a net realisable amount of $65 000; an inventory write-down expense of $45 000 was recognised. On 15 April 2021, the balance date impaired items of inventory were sold for $52 000. (v) 10 May 2021 In January 2021, Systems Ltd, a supplier of Martin Ltd, initiated legal proceedings against Martin Ltd (for a breach of contract). After Martin Ltd sought legal advice, a provision of $172 000 was recognised at the balance date to cover court costs and damages. The court decision, delivered on 10 May 2021, decreed that Martin Ltd had to pay damages and court costs of $195 000. (vi) 15 May 2021 - On April 13 2021, a building of Martin Ltd was seriously damaged by fire; this building had been purchased at the cost of $1 500 000 three years ago. The insurance company contacted Martin Ltd on 15 May 2021 to say the building would have to be demolished, however it was fully insured. (vii) 20 May 2021 - Martin Ltd discovers that Failure Ltd, who had an outstanding account receivable balance of $32 000 on 31 March 2021 was insolvent at balance date. Martin Ltd had considered Failure Ltd to be a doubtful debt at balance date. Required: Prepare a professional report (pages 5 to 7) for the managing director of Martin Ltd to explain the correct treatment of the above events according to the requirements of NZ IAS 10 Events after the Reporting Period