Exam 24: Events Occurring After Balance Sheet Date

Inventories reported at lower of cost or realisable amount that is found to be unsaleable after the reporting period should be treated as a non-adjusting event.

The following are material events that occurred for Yorba Linda Ltd between the reporting date and the date when the financial report is authorized for issue. Which of the following options identify all the adjusting events for Yorba Linda Ltd, in accordance with AASB 110 "Events after the reporting date"?

If it becomes apparent to an entity that new events or conditions have resulted that indicate that the entity is no longer a going concern, the entity must:

Banksia Ltd is in the process of completing its financial reports for the period ended 30 June 2009 when it becomes public knowledge that company income tax rates are to be increased and that the increase is to apply retrospectively to the financial year just completed. AASB 110 requires what treatment for this item?

Disclosures required by AASB 110 relating to subsequent events that impact on the going-concern status of the entity include:

Karingai Co Ltd has been experiencing cash flow difficulties and sought a long-term loan from a merchant bank to enable it to restructure its financing from short-term to long-term debt. The loan has been approved by the bank after reporting date and the funds are expected to be received before the time of completion of the accounts. How should this event be reported according to AASB 110?

Management of Utopia Ltd has become aware after reporting date that a major customer is insolvent. The customer apparently went into receivership before Utopia's reporting date and owes Utopia a material amount for inventory purchased during the period. According to AASB 110, how should this event be treated in Utopia's financial statements?

The 'authorisation date' for entities that are not companies is:

The 'authorisation date' of the financial reports of companies is:

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

The treatment for breach of going concern assumption as suggested AASB 110 was not acceptable in the old AASB 1002 for reasons that include:

Which of the following indicators is not an example of an event that casts doubts on the going concern status of the business?

A decline in market value of investments between the reporting period and the date the financial report is authorised for issue is typically an adjusting event.

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

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.

If it becomes known after reporting date that a debtor is now not able to pay a material amount that is owed to the reporting entity, the appropriate action according to AASB 110 is to:

Yandalup Ltd has a series of outback cattle stations. Subsequent to reporting date it is discovered that flooding before balance sheet 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?

Which of the following material after balance sheet date events is not considered a non-adjusting event

Harrier Ltd has borrowed substantially using foreign currency loans. An unexpected major downturn in the Australian economy after reporting date has substantially weakened the Australian dollar, increasing the size of the debt materially. According to AASB 110, how should this event be reported in the financial statements?

An adjusting event is one that: