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Case 2: PQR SAOC is a manufacturer of edible oil. You are an expert who deals with the transactions related to provisions, contingent assets, contingent liabilities and intangible assets in the company. For each of the scenario mentioned below provide with an appropriate solution with accounting treatment, calculations and necessary comments: (4 x 2.5 marks each = 10 marks) 1. On 5* December 2019, 50 people were hospitalized after consumption of food cooked in oil manufactured by the company. Legal suit was filed in the court of law for a damage of RO 2 million against the company. On the balance sheet date, the lawyer advised that it is likely that the enterprise will be found liable. But the amount of compensation will not exceed RO 1.5 million 2. The company is also sued for RO 30,000 for damages. It disputes the claim. It is unclear whether or not it will be liable. If it is found liable, it is unlikely that it would have to pay the claim in full. 3. The company owns a license to produce a unique type of oil. Such license is freely transferable and was acquired on 1* November 2017 valid for a period of 8 year. The license was acquired at a cost of RO 16,800 and was amortized using straight line method. Overtime the demand for such oil increased and the on 31* December 2019 such license had a trade value of RO 23,000. The company had decided to adopt revaluation model for such license. 4. The company has a franchise with varying value of RO 300,000 on 1* January 2019. It exchanged it for a similar franchise with a market price of RO 550,000. The company also incurred RO 50,000 for publicity and research expenses on one of its new customer products, which was test marketed during the year but proved to be a failure

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