Events after Reporting Period

i) Only events after the end of the reporting period that are material are covered by IAS 10 Events After the Reporting Period.

1. ii) Events occurring after the reporting date require a fundamental change in the accounting basis if they are so significant that they result in the organisation not being able to continue as a going concern. 

Which of the two statements above is/are TRUE?

• 1. A.(i) only

• 1. B.(ii) only

• 1. C.(i) and (ii)

• 1. D.Neither (i) nor (ii)

2. Which ONE of the following descriptions defines the time period during which an event occurring after the reporting period might arise?

• 1. A.Events that occur between the reporting date and the date of the annual general meeting.

• 1. B.Events that occur between the reporting date and the date on which the financial statements are authorised for issue.

• 1. C.Events that occur during the three months following the reporting date.

• 1. D.Events that occur during the six months following the reporting date

1. Which of the following material events occurring after the end of the reporting period are adjusting events?

   1. 1. Sales of inventory for less than cost

   2. 2. Payment received from a customer whose debt had been written off

   3. 3. Sale of a subsidiary company

   4. 4. A flood in the warehouse destroying inventor

• 1 and 2

• 1. B.2 and 3

• 3 and 4

• 1and 4

On 15 March 20X7 Fumi authorised for issue its financial statements for the year ended 31 December 20X6. On 10 March 20X7 the entity’s factory and several items of equipment were damaged in an earthquake. The damage is estimated to cost $700,000 of which $450,000 is expected to be covered under insurance policies.

How should this material event have been included in Fumi’s financial statements for the year ended 31 December 20X6?

• 1. A.As a provision of $700,000

• 1. B.As a provision of $250,000

• 1. C.As a contingent liability of $700,000 and a contingent asset of $250,000

• 1. D.As a note disclosure of the event

Which of the following events between the reporting date and the date the financial statements are authorised for issue must be adjusted in the financial statements?

• 1. A.Declaration of ordinary dividends

• 1. B.Decline in market value of investments

• 1. C.Discovery of a fraud revealing that inventory had been stolen

• Announcement of a major restructuring