Which of the following material after balance sheet 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) All of the given answers.
E) 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

Quizplus · Accepted Answer

An event that confirms that the entity had a present obligation on the reporting date is an adjusting event as it provides additional information about the financial position and performance of the entity at the reporting date.

Option B is a non-adjusting event as it gives information about future events that occurred after the reporting date.

Option C is also a non-adjusting event as it represents changes in the fair value of investments that occurred after the reporting date.

Option D is incorrect as it includes both adjusting and non-adjusting events.

Option E is incorrect as it includes a non-adjusting event (decline in market value of investments).

Which of the Following Material After Balance Sheet Date Events