Wattle Plc is in the process of completing its financial reports for the period ended 30 June 2014 when its accountant completes the collection of information about the realisable value of inventory as at reporting date.A number of items are reflected at a cost greater than net realisable value with a material effect on the accounts.What treatment does IAS 10 require for this event?
A)It should be disclosed in the Directors' Report.
B)The effect on the accounts should be disclosed in the notes to the financial statements.
C)No disclosure is required.
D)The financial statements should be adjusted to reflect the impact of the event.

Question

Quizplus · Accepted Answer

According to IAS 10, if events occur after the reporting period and provide additional information about the conditions that existed at the reporting date, the financial statements should be adjusted to reflect the impact of the event. In this case, the inventory items reflected at a cost greater than net realisable value have a material effect on the accounts and therefore, the financial statements should be adjusted to reflect the impact of this event.

Wattle Plc Is in the Process of Completing Its Financial