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.

Accepted Answer

A decline in the market value of investments after the reporting date but before the financial report is authorised for issue is considered a non-adjusting event, as it relates to conditions that arose after the reporting date.

Question 2

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

Accepted Answer

Contingent liabilities are not adjusting events as they represent an uncertainty that would require disclosure and possibly recognition in the financial statements. Adjusting events provide additional information about the financial position and performance of the entity up to the reporting date.

Question 3

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

Accepted Answer

The Directors' Declaration is a statement made by the directors of a company that includes a confirmation that the entity can pay its debts as they fall due. Therefore, the statement included in the declaration is 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.

Accepted Answer

According to AASB 110, a legal claim that has subsequently been settled is an example of an adjusting event. Adjusting events are events that provide additional evidence of conditions that existed at the reporting date and require adjustment of the amounts recognized in the financial statements.

Question 5

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

Accepted Answer

This statement is true. A subsequent event is an event that occurs or becomes known after the reporting date of a company's financial statements.

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.

Accepted Answer

Dividends declared after the reporting date but before the authorization for issue of the financial report still meet the criteria of a present obligation because they have been declared by the company and are therefore a legal obligation, even though the exact amount and identity of the shareholders may not be known 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.

Accepted Answer

This statement is true. An event occurring after reporting date is a post-reporting date event that happens after the end of the reporting period but before the financial statements are approved for issuance. Companies are required to disclose these events and adjust their financial statements accordingly.

Question 8

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

Accepted Answer

Events occurring after the balance date, also known as subsequent events, can include both material and non-material events, as they may still have a significant impact on the financial statements or require disclosure to provide a complete understanding of the financial position and performance.

Question 9

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

Accepted Answer

According to AASB 110 (Events After the Reporting Period), dividends declared or proposed after the reporting date are not recognised as a liability in the financial statements because they do not meet the criteria for a present obligation as of the reporting date.

Question 10

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

Accepted Answer

AASB 110 requires entities to assess the going concern basis of accounting after the reporting period and if there are any material uncertainties about the entity's ability to continue as a going concern, appropriate disclosures are required in the financial statements. These assessments are considered adjusting entries as they could have a material impact on the financial statements.

Question 11

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

Accepted Answer

AASB 110 and The Corporations Law contain requirements regarding events that occur after the reporting date. These events may have an impact on a company's financial statements and should be disclosed to ensure accuracy and transparency.

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.

Accepted Answer

Non-adjusting events after the reporting date can have a material impact on the financial position of a company and non-disclosure may lead users to make incorrect economic decisions based on the financial statements. Therefore, it is important for companies to disclose any material non-adjusting events that occur after the reporting date.

Question 13

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

Accepted Answer

Events after the reporting date should be disclosed if they provide additional information about the entity's financial position as at the reporting date. Therefore, this statement is false.

Question 14

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

Accepted Answer

Dividends declared after the reporting date but before the authorisation for issue of the financial report are not recognised as a liability in the financial statements because they do not represent a present obligation as of the reporting date.

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.

Accepted Answer

AASB 110 does require financial statements to be restated to a liquidation basis when going concern status changes after the reporting date, and it also requires extensive additional disclosures to be made in this situation.

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.

Accepted Answer

Non-adjusting events are those that occur after the reporting period and do not provide evidence of conditions that existed at the end of the reporting period. Unsaleable inventory identified after the reporting date is considered a non-adjusting event because it reflects conditions that arose after the reporting period.

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.

Accepted Answer

Non-adjusting events are those that occur after the balance sheet date but before the financial statements are authorized for issue and do not relate to conditions existing at the balance sheet date. Therefore, entities should not adjust the amounts in the financial statements for non-adjusting events.

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.

Accepted Answer

Bonus payments that are part of an existing agreement with employees determined after the reporting date are an example of an adjusting event. Adjusting events are those that provide further evidence of conditions that existed at the end of the reporting period, and the accounting entries for such events are made in the financial statements of the reporting period even if they occur after the reporting date. Therefore, bonus payments that are part of an existing agreement with employees determined after the reporting date are considered an adjusting event.

Question 19

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

Accepted Answer

The Directors' Declaration must be made and signed after all the other components of the financial report have been completed, but before the directors' report is signed and the financial report is issued, not necessarily before the reporting date.

Question 20

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

Accepted Answer

The statement is contradictory as it refers to the "reporting date" twice, suggesting a mistake. The reporting date is a specific point in time and cannot occur after itself.

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