Question 1

A non-adjusting event is one that occurs:

Accepted Answer

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. 
E)  None of the given answers. 
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. 
E)  None of the given answers. A

Question 2

Requirements regarding after-reporting-date-events are contained in AASB 110 and The Corporations Law:

Accepted Answer

A) True 
 B)False  True

Question 3

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

Accepted Answer

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 no longer to 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. 
E)  None of the given answers. 
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 no longer to 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. 
E)  None of the given answers. B

Question 4

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

Accepted Answer

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. 
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 5

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

A) True 
 B)False

Question 6

Events after reporting date should not be disclosed because the balance sheet is 'as at' a particular date:

Accepted Answer

A) True 
 B)False

Question 7

Dividends declared and proposed after balance sheet date may be recognised as liability and this is consistent with AASB 110:

Accepted Answer

A) True 
 B)False

Question 8

Which of the following material after balance sheet date events is not considered an adjusting event?

Accepted Answer

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. 
E)  Loss due to fire before the reporting date. 
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. 
E)  Loss due to fire before the reporting date.

Question 9

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

Accepted Answer

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. 
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 10

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

Accepted Answer

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)  If an unfavourable material event, disclosed as a contingent liability. 
D)  If an unfavourable material event, reflected in the financial statements; if a favourable event, disclosed by way of note. 
E)  None of the given answers. 
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)  If an unfavourable material event, disclosed as a contingent liability. 
D)  If an unfavourable material event, reflected in the financial statements; if a favourable event, disclosed by way of note. 
E)  None of the given answers.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

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)  A description of each event and all of the given answers. 
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)  A description of each event and all of the given answers.

Question 13

An event occurring after balance sheet 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

A) True 
 B)False

Question 14

Reporting date may occur 2 or 3 months after balance sheet date:

Accepted Answer

A) True 
 B)False

Question 15

Birong Ltd. issued $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?

Accepted Answer

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. 
E)  None of the given answers 
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. 
E)  None of the given answers

Question 16

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

Accepted Answer

A)  No action should be taken to report the event or transaction in the financial reports. 
B)  The balance sheet should not be adjusted but effects on the income statement 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. 
E)  None of the given answers. 
A)  No action should be taken to report the event or transaction in the financial reports. 
B)  The balance sheet should not be adjusted but effects on the income statement 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. 
E)  None of the given answers.

Question 17

Reporting events after balance sheet date is concerned with:

Accepted Answer

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 which occur or about which information becomes available between reporting date and time of completion. 
D)  Events or transactions which occur or about which information becomes available between balance sheet date and reporting date. 
E)  None of the given answers. 
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 which occur or about which information becomes available between reporting date and time of completion. 
D)  Events or transactions which occur or about which information becomes available between balance sheet date and reporting date. 
E)  None of the given answers.

Question 18

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?

Accepted Answer

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 appropriate. 
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 by AASB 110. 
E)  None of the given answers. 
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 appropriate. 
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 by AASB 110. 
E)  None of the given answers.

Question 19

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?

Accepted Answer

A)  Additional extensive disclosure of the realisation value of assets and the amounts at which liabilities are expected to be settled. 
B)  The assets should be recognised 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)  A recasting of the financial statements using fair value basis. 
E)  None of the given answers. 
A)  Additional extensive disclosure of the realisation value of assets and the amounts at which liabilities are expected to be settled. 
B)  The assets should be recognised 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)  A recasting of the financial statements using fair value basis. 
E)  None of the given answers.

Question 20

Subsequent to the balance sheet 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?

Accepted Answer

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. 
E)  None of the given answers. 
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. 
E)  None of the given answers.

Exam 24: Events Occurring After Balance Sheet Date

A non-adjusting event is one that occurs:

Requirements regarding after-reporting-date-events are contained in AASB 110 and The Corporations Law:

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

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

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

Events after reporting date should not be disclosed because the balance sheet is 'as at' a particular date:

Dividends declared and proposed after balance sheet date may be recognised as liability and this is consistent with AASB 110:

Which of the following material after balance sheet date events is not considered an adjusting event?

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

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

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

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

An event occurring after balance sheet 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:

Reporting date may occur 2 or 3 months after balance sheet date:

Birong Ltd. issued $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?

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

Reporting events after balance sheet date is concerned with:

Subsequent to the balance sheet 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?

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financ

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluation and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Lease

Set-Off and Extinguishment of Debt

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in E

Accounting for Share-Based Payments

Accounting for Income Taxes

Cash-Flow Statements

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Segment Reporting

Related-Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transact

Further Consolidation Issues Ii: Accounting for Minority Interests

Further Consolidation Issues Iii: Accounting for Indirect Ownershi

Further Consolidation Issues Iv: Accounting for Changes in the Deg

Accounting for Equity Investments

Accounting for Equity Investments

Accounting for Foreign Currency Transactions

Translation of the Accounts of Foreign Operations

Accounting for Corporate Social Responsibility

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