Deck 23: Events Occurring After the End of the Reporting Period

Question 1

A decline in market value of investments between the reporting date and the date the financial report is authorised for issue is typically an adjusting event.

Answer 1

False

Question 2

In AASB 110 Events After the Reporting Period,a contingent liability is an example of an adjusting event.

Answer 2

False

Question 3

The Directors' Declaration includes a statement that the entity can pay its debts as they fall due.

Answer 3

True

Question 4

In AASB 110 Events After the Reporting Period,a legal claim that has subsequently been settled is an example of an adjusting event.

Question 5

In general a subsequent event is one that occurs,or the occurrence of which becomes known,after the reporting date.

Question 6

Dividends declared after reporting date but before the authorisation for issue of the financial report do not meet the criteria of the present obligation because the identity of the shareholders is unknown until the date of payment.

Question 7

An event occurring after reporting date is a circumstance that has arisen,or information that has become available,after reporting date but before the time of completion of the report.

Question 8

Only material events should be considered for events occurring after balance date.

Question 9

Dividends declared and proposed after reporting date may be recognised as a liability and this is consistent with AASB 110.

Question 10

AASB 110 treats after-reporting-period assessments of the going concern basis of accounting as adjusting entries.

Question 11

Requirements regarding events after the reporting date are contained in AASB 110 and The Corporations Law.

Question 12

If non-adjusting events after the reporting date are material,non-disclosure could influence the economic decisions that users make based on the financial statements.

Question 13

Events after reporting date should not be disclosed because the statement of financial position is 'as at' a particular date.

Question 14

Dividends declared after the reporting date but before the authorisation for issue of the financial report are typically recognised as a liability.

Question 15

AASB 110 requires the financial statements to be restated to a liquidation basis and for extensive additional disclosures to be made when a change in going concern status occurs after reporting date.

Question 16

Inventory reported at lower of cost or realisable amount that is found to be unsaleable after the reporting date should be treated as a non-adjusting event.

Question 17

An entity may adjust the amounts in the financial statements for items classified as non-adjusting events,for as long as there is reasonable assurance that the amounts recognised are measured reliably.

Question 18

Bonus payments that are part of an existing agreement with employees determined after the reporting date is an example of an adjusting event.

Question 19

The Directors' Declaration must be signed before the reporting date.

Question 20

Reporting date may occur 2 or 3 months after reporting date.

Question 21

The period covered by AASB 110 Events After the Reporting Period is from:

A) date of the report to date of release to shareholders.
B) reporting date to date financial report is authorised for issue.
C) balance date to reporting date.
D) balance date to date financial reports are presented to the board of directors.

Question 22

Banksia Ltd is in the process of completing its financial reports for the period ended 30 June 2014 when it becomes public knowledge that company income tax rates are to be increased and that the increase is to apply retrospectively to the financial year just completed.What treatment is required by AASB 110 for this item?

A) No disclosure is required because the information is publicly available.
B) The potential effect on the accounts should be disclosed in the notes to the financial statements.
C) If material, the financial statements should be adjusted to reflect the impact of the event.
D) An adjustment to the statement of comprehensive income should be made, but only note disclosure for the statement of financial position since it is prepared as at the reporting date.

Question 23

Wattle Ltd 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 AASB 110 require for this event?

A) It should be disclosed in the Directors' Declaration.
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 24

In the case of a non-adjusting event,AASB 110 requires it to be:

A) reflected in the financial information in the statements if it is material and relates to an item that would normally be reflected in the financial statements.
B) disclosed by way of note if it is material.
C) disclosed as a contingent liability, if an unfavourable material event.
D) reflected in the financial statements, if an unfavourable material event; disclosed by way of note, if a favourable event.

Question 25

The disclosures AASB 110 requires for a material non-adjusting event include:

A) the financial effect of the event or, where it is not possible to estimate the effect reliably, a statement to that effect.
B) a description of why the event only came to be known of after reporting date.
C) details of the corporate governance procedures in place to ensure that further information regarding the event is gathered in a timely fashion.
D) the financial effect of the event or, where it is not possible to estimate the effect reliably, a statement to that effect and a description of why the event only came to be known of after reporting date.

Question 26

AASB 110 specifies that adjusting events should be considered against two criteria to determine their treatment.The two criteria are:

A) (a) provides an indication that conditions may have existed at reporting date; or (b) reveals additional solid evidence of a condition that existed at reporting date.
B) (a) provides additional evidence of conditions that existed at the date the audit report was signed; or (b) reveals for the first time a condition that existed at date of completion.
C) (a) provides an indication that conditions may have existed at date of completion; or (b) reveals additional solid evidence of a condition that existed at date of completion.
D) (a) provides additional evidence of conditions that existed at reporting date; or (b) reveals for the first time a condition that existed at reporting date.

Question 27

After the auditor has signed the audit report the next step in the process is to:

A) print and distribute the reports.
B) have the directors sign the Directors' Declaration.
C) prepare the financial statements.
D) prepare the notes to the accounts.

Question 28

AASB 110 requires additional disclosures in which of the following situations?

A) related party transactions that affect the ability of the entity to trade profitably and that occur after reporting date
B) any event that occurs after the reporting date that would cause the entity to no longer be considered a going concern
C) any event likely to have a material effect that occurs after the directors have signed the Directors' Declaration
D) material changes to the dividends proposed for the following period that occurs after reporting date

Question 29

A non-adjusting event is one that:

A) provides evidence about new conditions that did not exist at reporting date.
B) occurs before reporting date.
C) provides additional evidence of or information about conditions that existed at the reporting date.
D) occurs before the auditor signed the audit report.

Question 30

Disclosures required by AASB 110 relating to subsequent events that affect on the going concern status of the entity include:

A) the period over which the entity is expected to be able to continue trading.
B) assets for which the going concern basis is not appropriate, the carrying amounts and the amounts for which the assets are expected to be realised.
C) the directors' proposal for action to address the difficulties that have emerged since reporting date.
D) the period over which the entity is expected to be able to continue trading and assets for which the going concern basis is not appropriate, the carrying amounts and the amounts for which the assets are expected to be realised.

Question 31

Hawk Ltd has borrowed substantially in foreign currency loans.An unexpected major downturn in the Australian economy after reporting date has substantially weakened the Australian dollar.It appears that Hawk Ltd will not be able to meet the foreign currency debt as it falls due.According to AASB 110,how should this event be reported in the financial statements?

A) additional extensive disclosure of the realisation value of assets and the amounts at which liabilities are expected to be settled
B) recognition of the assets in the financial statements at fair value and the liabilities reported at their settlement amounts
C) additional extensive disclosures about the timing and maturity date of debts and the cash flow shortfalls expected
D) recasting of the financial statements using fair value basis

Question 32

AASB 110 requires that adjusting events that meet two broad criteria should be:

A) reflected in the financial information in the statements if it is material and relates to an item that would normally be reflected in the financial statements.
B) always disclosed by way of a note to the financial statements.
C) disclosed as a contingent liability, if an unfavourable event.
D) reflected in the financial statements, if an unfavourable event; disclosed by way of note, if a favourable event.

Question 33

The 'authorisation date' for entities that are not companies is:

A) when the auditor signs the audit report.
B) when the financial reports are signed off by the accountant in the presence of the auditor's representative.
C) when the financial reports are accepted by the taxation office.
D) when the reports are given final approval by the governing body or management of the entity, whichever is applicable.

Question 34

If an event or transaction that occurs after reporting date does not relate to conditions that existed at reporting date then:

A) No action should be taken to report the event or transaction in the financial reports.
B) The statement of financial position should not be adjusted but effects on the statement of comprehensive income should be reflected in that statement.
C) The event or transaction should be disclosed in the notes to the accounts as a post-reporting date event and the financial statements adjusted appropriately.
D) The event or transaction should be disclosed in the notes to the accounts if it is material.

Question 35

Reporting events after reporting date is concerned with:

A) information that becomes available between the date the reports are completed and the date the auditor signs the audit report.
B) events that occur or information that becomes available after the directors sign the Directors' Declaration and before the reports are printed.
C) events or transactions that occur or about which information becomes available between reporting date and time of completion.
D) events or transactions that occur or about which information becomes available between reporting date and reporting period date.

Question 36

An adjusting event is one that:

A) occurs before the auditor signed the audit report.
B) provides additional evidence of or information about conditions that existed at the reporting date.
C) occurs after reporting date and relates to impacts that will occur before the time of completion.
D) provides additional evidence of or information about conditions that existed at the time of completion.

Question 37

A non-adjusting event is one that occurs:

A) after the reporting date.
B) after the auditor has signed the audit report.
C) after the completion of the financial reports.
D) after the financial statements have been distributed.

Question 38

The 'authorisation date' of the financial reports of companies is:

A) the date the auditor prepares the audit report.
B) the date on which the printing of the reports is completed or they are posted on a website.
C) the date the reports are posted to stakeholders.
D) the date the Directors' Declaration is signed.

Question 39

The disclosures AASB 110 requires for material non-adjusting events include:

A) a description of each event.
B) a statement that the financial effect of each event has been recognised and a measure of the size of that effect in the financial statements.
C) a statement that the event occurred after reporting date.
D) all of the given answers.

Question 40

If it becomes known after reporting date that a debtor is now not able to pay a material amount that is owed to the reporting entity,the appropriate action according to AASB 110 is to:

A) Adjust the balance of accounts receivable and write off the bad debt and make a note disclosure that this event occurred after reporting date.
B) Adjust the balance of accounts receivable and write off the bad debt.
C) Disclose the event in the notes to the accounts.
D) Do nothing this period but write the debt off in the accounts for the next period.

Question 41

Which of the following material after-reporting-date events is not considered an adjusting event?

A) determination after the reporting date of the cost of assets purchased before the reporting date
B) receipt of information after reporting date indicating that an asset was impaired at reporting date
C) determination after the reporting date the amount of bonus payment payable to senior executives
D) destruction of assets due to flood after the reporting date

Question 42

Which of the following material after reporting date events is considered an adjusting event?

A) settlement after reporting date of a court case that confirms that the entity has a present obligation on reporting date
B) an announcement of a plan to discontinue a business operation
C) decline in market value of investments between reporting date and the date when the financial report is authorised for issue
D) settlement after reporting date of a court case that confirms that the entity has a present obligation on reporting date, and decline in market value of investments between reporting date and the date when the financial report is authorised for issue

Question 43

Which of the following material after-reporting-date events is not considered a non-adjusting event?

A) a major acquisition of capital assets after the reporting date
B) destruction of inventory by vandals after the reporting date
C) changes in tax rates or tax laws enacted or announced after the reporting date
D) destruction of inventory on consignment by vandals before the reporting date

Question 44

Management of Utopia Ltd has become aware after reporting date that a major customer is insolvent.The customer apparently went into receivership before Utopia's reporting date and owes Utopia a material amount for inventory purchased during the period.According to AASB 110,how should this event be treated in Utopia's financial statements?

A) The account receivable should be written off.
B) The event should be disclosed in the notes to the financial statements, including information about the financial effect of the customer's insolvency.
C) No reporting is required.
D) The directors are required to disclose the event in the Directors' Declaration.

Question 45

Subsequent to the reporting date but before the authorisation date of the financial reports,the dividend to be paid by Hannibal Ltd has been determined.How should this decision be recorded in the financial statements according to AASB 110?

A) The event should be disclosed in a note to the financial statements.
B) The event should be fully reflected in the financial statements.
C) No reporting is required.
D) The shareholders should be informed by separate letter.

Question 46

The following are material events that occurred for Yorba Linda Ltd between the reporting date and the date when the financial report is authorised for issue.
$\begin{array}{|l|l|}\hline \text { I}& \text { Bankruptcy of a customer that occurs after the reporting date } \\\hline \text { II } & \begin{array}{l}\text { Determination after the reporting date of the costs assets purchased before the } \\\text { reporting date }\end{array} \\\hline \text { III} & \begin{array}{l}\text { Decline in market value of investments after the reporting date of investments } \\\text { purchased before the reporting date }\end{array} \\\hline \mathrm{IV} & \text { Dividends declared after the reporting date } \\\hline \mathrm{V} & \text { A lawsuit filed by a customer after the reporting date } \\\hline \text { VI }& \text { Discovery of fraud that shows that the financial report is incorrect }\\\hline\end{array}$
Which of the following options identify all the adjusting events for Yorba Linda Ltd,in accordance with AASB 110 Events After the Reporting Period?

A) I, II and III
B) II, III and IV
C) I, II and VI
D) III, IV and V

Question 47

Birong Ltd.issued a $200 million preference share issue after reporting date.What is the classification of this subsequent event and what is the accounting treatment prescribed in AASB 110?

A) adjusting event; no disclosure necessary
B) adjusting event; with appropriate disclosure
C) non-adjusting event; no disclosure necessary
D) non-adjusting event; with appropriate disclosure

Question 48

Fruitcorp Ltd has been negotiating a merger with a company that is currently its major supplier.Subsequent to reporting date the merger agreement is finalised.The merger materially affects the size and structure of the new entity and should bring substantial economic benefits to all shareholders.How should this event be reported according to AASB 110?

A) The size and significance of this event is such that it should be fully reflected in the financial accounts. New group accounts should be prepared to reflect the actual economic entity that exists at the time of completion of the financial reports.
B) No disclosure is required.
C) A description of the event, the fact that it occurred after reporting date and its financial effect on the company should be disclosed by way of a note to the accounts.
D) Disclosure of the event in the Directors' Declaration is required.

Question 49

If it becomes apparent to an entity that new events or conditions have resulted that indicate that the entity is no longer a going concern,the entity must:

A) treat this as a non-adjusting event and discloses the reason for the breach of the going concern assumption.
B) treat this as an adjusting event and adjust the affected accounts in the financial report.
C) prepare its financial report on a going concern basis and ask the auditor to indicate in the opinion the breach of the going concern basis.
D) prepare the financial reports adopting a fundamental change in the basis of accounting, say use of liquidation values instead of modified historical cost basis.

Question 50

Gowanland Co Ltd is being sued over damage to farmland as a result of an accident in which poisonous chemicals were mixed with fertiliser.At reporting date there was no information about the court decision and a contingent liability had been disclosed.Subsequent to the reporting date,the court handed down its decision and upheld a substantial claim for damages.According to AASB 110 how should this event be treated in the financial statements?

A) The contingent liability note should be extended to provide additional information based on the after-reporting-date event.
B) The contingent liability note should remain as it is because it reflects the situation existing at reporting date.
C) The contingent liability can now be measured reliably and is no longer contingent, so it should be recognised in the financial statements as a provision.
D) The treatment would depend on whether or not the entity had received advice from solicitors regarding the likely success of an appeal.

Question 51

Requirements other than those in AASB 110 regarding after-reporting-date events include:

A) The AASB Framework requirement that the financial statements fully reflect all financial effects either through note disclosure or recognition in the financial statements of any events that occur up to the date of completion.
B) The Corporations Law requirement that a company's directors must give details in their report of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect, the entity's operations or the result of those operations or state of affairs in future financial years.
C) The Corporations Law regulations regarding the conduct of an audit that requires auditors to qualify any set of financial statements that do not fully incorporate either in note disclosure or full recognition in the financial statements all events up to the signing of the audit report.
D) AASB Framework requires that the financial statements fully reflect all financial effects either through note disclosure or recognition in the financial statements of any events that occur up to the date of completion and The Corporations Law requirement that a company's directors must give details in their report of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect, the entity's operations or the result of those operations or state of affairs in future financial years.

Question 52

Harrier Ltd has borrowed substantially using foreign currency loans.An unexpected major downturn in the Australian economy after reporting date has substantially weakened the Australian dollar,increasing the size of the debt materially.According to AASB 110,how should this event be reported in the financial statements?

A) The foreign currency debt should be restated at the new exchange rates and the loss recognised.
B) No reporting is required.
C) Harrier Ltd's bank and/or debenture trustees should be notified of the potential that the company may break its debt covenant.
D) A note disclosure of the event should be made.

Question 53

Karingai Co Ltd has been experiencing cash flow difficulties and sought a long-term loan from a merchant bank to enable it to restructure its financing from short-term to long-term debt.The loan has been approved by the bank after reporting date and the funds are expected to be received before the time of completion of the accounts.How should this event be reported according to AASB 110?

A) If the loan is material and the effect on the future financial performance of the entity is significant, AASB 110 requires the directors to disclose the event in the Director's Report and incorporate it into the financial statements.
B) The directors are required to disclose the event in the Directors' Declaration.
C) No note disclosure is required in this case.
D) The even should be disclosed in a note, the fact that it occurred after reporting date and its financial effect on the company should be provided.

Question 54

Which of the following material after-reporting-date events is a non-adjusting event?

A) major disposal of assets before the reporting date
B) expropriation of assets by government before the reporting date
C) issue of preference shares shortly after the reporting date
D) settlement before authorisation date of the financial report of a lawsuit filed by a customer three years ago

Question 55

Which of the following material after-reporting-date events is not considered a non-adjusting event?

A) a major business combination after the reporting date
B) destruction of a major production plant by fire after reporting date
C) changes in tax rates or tax laws enacted or announced after the reporting date
D) bonus payments determined after the reporting date

Question 56

If an adjusting event that occurs after reporting date is considered to be immaterial AASB 110 requires that the entity:

A) must disclose the nature of the event and a statement that an estimate of the financial effects cannot be made.
B) must recognise the event at balance date.
C) need not recognise nor disclose the event.
D) must recognise the event at balance date and need not recognise nor disclose the event.

Question 57

Cavalier Co Ltd is being sued for negligence in manufacturing a piece of equipment that has allegedly resulted in injury to an employee of the claimant business.The accident occurred after reporting date,but Cavalier has settled quickly so the outcome is now known before the authorisation date of the financial statements.The settlement is for a material amount.How should this transaction be recorded in the financial statements according to AASB 110?

A) The event should be disclosed in a note to the financial statements.
B) The event should be fully reflected in the financial statements as the outcome is complete and known before the time of completion of the reports.
C) No reporting is required.
D) The event should be disclosed in a note to the financial statements and fully reflected in the financial statements as the outcome is complete and known before the time of completion of the reports.

Question 58

Yandalup Ltd has a series of outback cattle stations.Subsequent to reporting date it is discovered that flooding before reporting date has destroyed several farm buildings,equipment and some stock.The loss is material in size.How should this event be reported according to AASB 110?

A) No disclosure is required.
B) The event's financial effect should be recognised in the financial statements for the period.
C) The event's effect on the entity should be included in note disclosure.
D) Disclosure of the event in the Directors' Declaration is required.

Question 59

The following are material events that occurred for Virgil Ltd between the reporting date and the date when the financial report is authorised for issue.
$\begin{array}{|l|l|}\hline \text { I}& \text { Bankruptcy of a customer that occurs after the reporting date } \\\hline \text { II } & \begin{array}{l}\text { Determination after the reporting date of the costs assets purchased before the } \\\text { reporting date }\end{array} \\\hline \text { III} & \begin{array}{l}\text { Decline in market value of investments after the reporting date of investments } \\\text { purchased before the reporting date }\end{array} \\\hline \mathrm{IV} & \text { Dividends declared after the reporting date } \\\hline \mathrm{V} & \text { A lawsuit filed by a customer after the reporting date } \\\hline \text { VI }& \text { Discovery of fraud that shows that the financial report is incorrect }\\\hline\end{array}$
Which of the following options identify all the non-adjusting events for Virgil Ltd,in accordance with AASB 110 Events After the Reporting Period?

A) I, II and III
B) II, III and IV
C) I, II and VI
D) III, IV and V

Question 60

The treatment for breach of going concern assumption as suggested by AASB 110 was not acceptable in the old AASB 1002 for reasons that include:

A) The event is so significant in its effect on the economic decision making of general purpose financial statement users that it is vital that the financial statements be restated in the light of that information.
B) The ethical dilemma for accountants and accounting regulators is that by requiring more disclosure from an entity that is already in financial difficulty, the accountants may actually hasten the demise of a business.
C) It is not necessary to require the management of an entity to take action regarding its going concern status since it is the responsibility of the auditors to establish that going concern conditions exist.
D) It is not appropriate to adjust the assets and liabilities recognised in the financial statements because under The Corporations Law and SAC 2 the financial statements must provide operating results for the reporting and the financial position as at the end of the reporting.

Question 61

The following are material events that occurred for Hervey Bay Ltd between the reporting date and the date when the financial report is authorised for issue.
$\begin{array}{|l|l|}\hline \text { I }& \text { Acquisition of a major business competitor } \\\hline \text { II } & \text { Discovery of inventory items damaged by floods before the reporting date } \\\hline \text { III } & \begin{array}{l}\text { Receipt of information after the reporting date indicating that an asset was } \\\text { impaired at reporting date }\end{array} \\\hline \mathrm{IV} & \begin{array}{l}\text { Settlement of a court case outstanding for many years that confirms that the } \\\text { entity had a present obligation at the reporting date }\end{array} \\\hline \mathrm{V} & \text { Major litigation arising solely out of events that occurred after the reporting date } \\\hline \text { VI }& \text { Dividends declared before the reporting date but paid after the reporting date }\\\hline\end{array}$
Which of the following options identify all the adjusting events for Hervey Bay Ltd,in accordance with AASB 110 Events After the Reporting Period?

A) I, III and VI
B) II, III and VI
C) III, IV, V and VI
D) IV, V and VI

Question 62

Discuss the accounting treatment required in AASB 110 for dividends declared and proposed after reporting date.How does this differ from pre-AIFRS treatment?

Question 63

Which of the following statements is incorrect with respect to AASB 110 Events After the Reporting Period?

A) An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting date.
B) If an entity declares dividends to holders of equity instruments after the reporting date, the entity shall not recognise those dividends as a liability at the reporting date.
C) An entity may prepare its financial statements on a going concern basis if management determines after the reporting date that it intends to go on voluntary liquidation.
D) An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the reporting date.

Question 64

Which of the following indicators is not an example of an event that casts doubts on the going concern status of the business?

A) a court decision with material damages against the business
B) resignation of an employee
C) recoverability of trade receivables during a recession
D) denial of a significant credit line

Question 65

Explain the period covered by AASB 110 Events After the Reporting Period and discuss how the period covered is determined.

Question 66

If an entity is no longer a going concern,AASB 110 requires that the financial reports be prepared on a liquidation basis.Discuss why this treatment is inconsistent with the treatment of non-adjusting events.

Question 67

The following are material events that occurred for Fraser Island Ltd between the reporting date and the date when the financial report is authorised for issue.
$\begin{array}{|l|l|}\hline \text { I }& \text { Acquisition of a major business competitor } \\\hline \text { II } & \text { Discovery of inventory items damaged by floods before the reporting date } \\\hline \text { III } & \begin{array}{l}\text { Receipt of information after the reporting date indicating that an asset was } \\\text { impaired at reporting date }\end{array} \\\hline \mathrm{IV} & \begin{array}{l}\text { Settlement of a court case outstanding for many years that confirms that the } \\\text { entity had a present obligation at the reporting date }\end{array} \\\hline \mathrm{V} & \text { Major litigation arising solely out of events that occurred after the reporting date } \\\hline \text { VI }& \text { Dividends declared before the reporting date but paid after the reporting date }\\\hline\end{array}$
Which of the following options identify all the non-adjusting events for Fraser Island Ltd,in accordance with AASB 110 Events After the Reporting Period?

A) I, II, III and VI
B) I, II and V
C) II, III and V
D) III, IV and VI

Question 68

What is a 'non-adjusting event' in accordance with AASB 110?
Provide examples.

Question 69

Discuss the two types of events after the reporting period.

Question 70

Which of the following events would be an example of an event that casts doubts on the going concern status of the business?

A) several major customers find an alternative supplier
B) resignation of an employee
C) forward payment to a major supplier
D) directors decide on no final dividend

Question 71

The AASB 110 disclosure requirements for material non-adjusting events does not include:

A) a description of each event.
B) a statement that the financial effect of each event has been recognised and a measure of the size of that effect in the financial statements.
C) a statement that the event occurred after reporting date.
D) All of the given choices are not required to be disclosed.

Question 72

Explain the period covered by AASB 110 Events After the Reporting Period and discuss the accounting treatment required by AASB 110 if a material event arises during this period.

Question 73

Which of the following indicators is not an example of an event that casts doubts on the going concern status of the business?

A) a court decision with immaterial damages against the business
B) major uninsured fire damage
C) recoverability of trade receivables during a recession
D) denial of a significant credit line

Question 74

Provide an example of an adjusting event and explain why this event satisfies the criteria of AASB 110 Events After the Reporting Period.

Question 75

What is an 'adjusting event' in accordance with AASB 110?
Provide examples.

Question 76

Discuss the disclosure requirements for non-adjusting events as prescribed in AASB 110.

Question 77

If new events or conditions indicate that the entity will not be able to continue as a going concern,the entity must:

A) treat this as an adjusting event and adjust the affected accounts in the financial report.
B) treat this as a non-adjusting event and discloses the reason for the breach of the going concern assumption.
C) prepare its financial report on a going concern basis and ask the auditor to indicate in the opinion the breach of the going concern basis.
D) disclose the assets and liabilities in the statement of financial position on a liquidation basis.