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The Covid 19 pandemic has seriously affected the economic condition of many countries in the...

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Accounting

The Covid 19 pandemic has seriously affected the economic condition of many countries in the world. The economists of Malaysia are quite pessimistic with the GDP growth of the country. Currently many companies in Malaysia are unable to sustain their business and unemployment rate has surged to a historical high. The market research conducted by M&M Berhad indicated that entertainment segment of the company is likely to continue to perform badly in the next coming years. However, the other segments of the company such as the pharmaceutical and online marketing are performing well in the current year as well as the near future. One of the company directors has proposed that the company should record a provision for the future losses this year for the entertainment business since the profits made from other business segments are sufficient to offset the anticipated future losses and the company will still show good results as a whole.

Required: Advise the director on the appropriate accounting treatments for the above case. (5 marks)

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