QUESTION 4 (13 marks) Storage Solutions (Pty) Ltd is a company that specialises in creating and manufacturing innovative storage solutions to use in and around the house, such as pegboards, food cupboard organisers, customised closet systems, and over-the-door- and understairs organisers. During the preparation of Storage Solutions (Pty) Ltd's 30 June 2025 financial statements, management was made aware of the following two material outstanding issues: Issue 1: A competitor, Home Storage (Pty) Ltd, is suing Storage Solutions (Pty) Ltd for allegedly copying the concept of one of their food cupboard organising units. Legal proceedings started on 1 June 2025, but no court date has been set for the case to be heard. Based on communication from Storage Solutions (Pty) Ltd's legal team, they will need to pay Home Solutions (Pty) Ltd R1 750 000 in damages should the claim be successful. Storage Solutions (Pty) Ltd's legal team, however, assessed the likelihood of paying the R1 750 000 to be less than probable. Storage Solutions (Pty) Ltd has not made a provision, nor included any disclosure for this potential claim in their 30 June 2025 financial statements. Issue 2: In July 2025, Storage Solutions (Pty) Ltd received communications from one of their customers to inform them that they would not be able to pay their outstanding balance of R950 000 owed to Storage Solutions (Pty) Ltd due to financial difficulties. This was the balance the customer owed as of 30 June 2025. Storage Solutions (Pty) Ltd did not account for this in their 2025 financial statements, as the information was only available after the reporting period. 13 HFAC232-1-Jan-Jun2025-SA1-CP-V3-29012025 REQUIRED: With reference to the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Asset and IAS 10 Events after the Reporting Period, discuss how Storage Solutions (Pty) Ltd should treat the two outstanding issues in its 30 June 2025 financial statements. Issue 1 (6 marks) Issue 2 (6 marks) Communication skill: Logical argument (1 mark)