Analyse the issue(s)/problem(s) faced by SSB by referring to the MFRS 137 Provisions, Contingent Liabilities and Contingent Assets Suwit Semailee Berhad (SSB) is a manufacturer of branded and generic prescriptionpharmaceuticals, vaccines and over-the-counter medications, based in Penang, Malaysia. Thecompany was established in 2000 and it is now in the process of business expansion pace. Thecompany closes its account on 31 March.The following is the summary of SSB's statement of financial position as at 31 December 2021(the third quarter of the accounting year):quity and LiabilitiesAssetsPlant (net)InventoryRM2,725,000 Share capital-ordinary575,000 Retained earnings550,000 Accounts payable410,0004,260,000RM 2,000,0001,885,000375,000ReceivablesCash4,260,000SSB is fighting a legal case with Boleh Jadi Berhad (BJB) for two years. There was atransaction between both companies in 2019 where BJB was supposed to supply goods to SSBfor the return of RM600,000. The goods were delivered far behind the agreed date and someof the goods had already expired. BJB offered to replace all the goods, but SSB did not agreefor replacement and denied payment to BJB. The case was filed in court by BJB demanded afull payment and compensation of RM400,000 for the harassment. It has been two years andthe court will continue the hearing in February 2022. It seems that SBB is losing the case andtotal payment of RM1,000,000 is to be made to BJB. Mr Aidil, the accountant of SSB Bhd isnot familiar with this event and not sure on how to account for the court case.The company currently issued 800,000 ordinary shares. The management is planning todistribute 20% share dividend as part of strategy to move its retained earnings to share capital.Due to the need for business expansion, the management is also considering on the issuance ofmore shares to induce the capital of the company. Among the options is issuing additional200,000 ordinary shares at a price of RM2.75 per share. Another option is issuing 9%preference shares, whether a non-cumulative or callable preference share. The CEO in theearlier discussion with two of the directors showed more interest in issuing ordinary sharesrather than preference. However, the two directors had the opposing view due to certainreasons.On 1 January 2022, the company issued 100,000 ordinary shares at a price of RM2.75 pershare, for the exchange of herbal oil extraction machine worth RM290,000. Despite thearguments on the types of shares to be issued, the company also on the same date, issued300,000 ordinary shares for RM2.80 per share. The legal fees incurred in relation to theissuance of the share were RM3,000.The decisions on issuing ordinary shares were passed by a simple majority among board ofdirectors. The two directors involved in the initial discussions with the CEO are still notsatisfied with the decision. They plan to have another meeting with the CEO on the matters.2

Name: Analyse the issue(s)/problem(s) faced by SSB by referring to the MFRS
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Description: Analyse the issue(s)/problem(s) faced by SSB by referring to the MFRS 137 Provisions, Contingent Liabilities and Contingent Assets Suwit Semailee Berhad (SSB) is a manufacturer of branded and generic prescriptionpharmaceuticals, vaccines and over-the

Contingent liabilities refer to the liability that arises to an entity out of an unexpected future…

Answered: s)/problem(s) faced by SSB by referring…

Business

Accounting

s)/problem(s) faced by SSB by referring to the MFRS 137 Provisions, Contingent Liabilities and Contingent Assets

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter1: Introduction To Accounting And Business

Section: Chapter Questions

Problem 26E

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