Which of the following material after balance sheet 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.
E) None of the given answers.

Question

Quizplus · Accepted Answer

The issue of preference shares shortly after the reporting date is a non-adjusting event as it occurs after the balance sheet date and does not affect the financial position of the company at the reporting date. A is incorrect as the major disposal of assets before the reporting date should be reflected in the financial statements. B is incorrect as the expropriation of assets before the reporting date should also be reflected in the financial statements. D is incorrect as the settlement of a lawsuit filed by a customer three years ago should be reflected as a provision in the financial statements if it was probable and could be reliably estimated at the reporting date.

Which of the Following Material After Balance Sheet Date Events