KK Ltd. prepares its financial statements annually with 31 March as the reporting date. The financial statements of KK Ltd. are approved for issue…

KK Ltd. prepares its financial statements annually with 31 March as the reporting date. The financial statements of KK Ltd. are approved for issue on 25 May 20X2. As at 31 March 20X2, KK Ltd. had a trade receivable of ₹ 10 million from Z Ltd., which was due for payment on 30 April 20X2. Z Ltd. had been a customer of KK Ltd. for several years and had an excellent payment history. At 31 March 20X2, there was no indication that Z Ltd. would be unable to settle the amount due. However, on 20 April 20X2, significant doubt arose regarding Z Ltd.'s ability to continue as a going concern because of the failure of certain major business projects. On 1 August 20X1, KK Ltd. supplied products manufactured by it to C Ltd. The products were subsequently found to be faulty. On 1 October 20X1, C Ltd. commenced legal proceedings against KK Ltd. claiming damages for losses arising from the faulty products. KK Ltd. determined that the products were faulty because of defective raw materials supplied by Y Ltd. Accordingly, on 1 December 20X1, KK Ltd. commenced legal proceedings against Y Ltd. to recover damages. KK Ltd. consistently assessed that it was probable that both legal actions would succeed. The estimates of damages were as follows: Date Damages payable by KK Ltd. to C Ltd. Damages receivable from Y Ltd. 1 October 20X1 ₹ 5.00 million - 1 December 20X1 - ₹ 3.50 million 31 March 20X2 ₹ 5.20 million ₹ 3.60 million 15 May 20X2 ₹ 5.25 million ₹ 3.70 million 1 June 20X2 – settlement ₹ 5.30 million ₹ 3.75 million The case against C Ltd. was settled on 1 June 20X2, when KK Ltd. paid ₹ 5.30 million. The case against Y Ltd. was also settled on that date, when Y Ltd. paid ₹ 3.75 million to KK Ltd. Other information During the year, KK Ltd. purchased a machine for ₹ 2,50,000. Depreciation of ₹ 50,000 was charged in arriving at accounting profit. The tax authorities allowed a deduction of ₹ 1,00,000 against taxable profits in the current period. The remaining cost will be deductible in future periods, either through depreciation or on disposal. KK Ltd. also had interest receivable of ₹ 60,000 on 31 March 20X2. The related interest income is taxable on a cash basis, i.e., when the interest is actually received. Based on the facts given above, choose the most appropriate answer to Questions 1 to 5 below as per the relevant Ind AS.