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

Quizplus · Accepted Answer

The event is an adjusting event according to AASB 110 because it provides evidence of conditions that existed at the balance sheet date (the flooding occurred before the reporting date and had a material impact). Therefore, its financial effects should be recognised in the financial statements for the period.

Yandalup Ltd Has a Series of Outback Cattle Stations