Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

If an adjusting event that occurs after balance sheet date is considered to be immaterial,AASB 110 requires that the entity:

Accepted Answer

A)  must disclose the nature of the event and a statement that an estimate of the financial effects cannot be made. 
B)  must recognise the event at balance date. 
C)  need not recognise nor disclose the event. 
D)  must recognise the event at balance date and need not recognise nor disclose the event. 
E)  None of the given answers. 
A)  must disclose the nature of the event and a statement that an estimate of the financial effects cannot be made. 
B)  must recognise the event at balance date. 
C)  need not recognise nor disclose the event. 
D)  must recognise the event at balance date and need not recognise nor disclose the event. 
E)  None of the given answers.

Question 3

The requirements of AASB 110 for additional disclosures in the face of going-concern difficulties revealed after balance sheet date have been argued to be so extensive that they add financial pressure to a business already in financial distress:

Accepted Answer

A) True 
 B)False

Question 4

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 5

AASB 110 specifies that adjusting events should be considered against two criteria to determine their treatment.The two criteria are:

Accepted Answer

A)  (a) provides an indication that conditions may have existed at balance sheet date; or (b) reveals additional solid evidence of a condition that existed at balance sheet date. 
B)  (a) provides additional evidence of conditions that existed at the date the audit report was signed; or (b) reveals for the first time a condition that existed at date of completion. 
C)  (a) provides an indication that conditions may have existed at date of completion; or (b) reveals additional solid evidence of a condition that existed at date of completion. 
D)  (a) provides additional evidence of conditions that existed at reporting date; or (b) reveals for the first time a condition that existed at reporting date. 
E)  None of the given answers. 
A)  (a) provides an indication that conditions may have existed at balance sheet date; or (b) reveals additional solid evidence of a condition that existed at balance sheet date. 
B)  (a) provides additional evidence of conditions that existed at the date the audit report was signed; or (b) reveals for the first time a condition that existed at date of completion. 
C)  (a) provides an indication that conditions may have existed at date of completion; or (b) reveals additional solid evidence of a condition that existed at date of completion. 
D)  (a) provides additional evidence of conditions that existed at reporting date; or (b) reveals for the first time a condition that existed at reporting date. 
E)  None of the given answers.

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

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:

Accepted Answer

A)  treat this as a non-adjusting event and discloses the reason for the breach of the going concern assumption. 
B)  treat this as an adjusting event and adjust the affected accounts in the financial report. 
C)  must prepare its financial report on a going concern basis and ask the auditor to indicate in the opinion the breach of the going concern basis. 
D)  must prepare the financial reports adopting a fundamental change in the basis of accounting, say use of liquidation values instead of modified historical cost basis. 
E)  None of the given answers. 
A)  treat this as a non-adjusting event and discloses the reason for the breach of the going concern assumption. 
B)  treat this as an adjusting event and adjust the affected accounts in the financial report. 
C)  must prepare its financial report on a going concern basis and ask the auditor to indicate in the opinion the breach of the going concern basis. 
D)  must prepare the financial reports adopting a fundamental change in the basis of accounting, say use of liquidation values instead of modified historical cost basis. 
E)  None of the given answers.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The period covered by AASB 110 "Events occurring after balance sheet date" is from?

Accepted Answer

A)  date of the report to date of release to shareholders. 
B)  reporting date to date financial report is authorised for issue. 
C)  balance date to reporting date. 
D)  balance date to date financial reports are presented to the board of directors. 
E)  None of the given answers. 
A)  date of the report to date of release to shareholders. 
B)  reporting date to date financial report is authorised for issue. 
C)  balance date to reporting date. 
D)  balance date to date financial reports are presented to the board of directors. 
E)  None of the given answers.

Question 10

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 11

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.

Question 12

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 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

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?

Accepted Answer

A)  The account receivable should be written off. 
B)  The event should be disclosed in the notes to the financial statements, including information about the financial impact of the customer's insolvency. 
C)  No reporting about the event is required. 
D)  The directors are required to disclose the event in the Directors' Declaration. 
E)  None of the given answers. 
A)  The account receivable should be written off. 
B)  The event should be disclosed in the notes to the financial statements, including information about the financial impact of the customer's insolvency. 
C)  No reporting about the event is required. 
D)  The directors are required to disclose the event in the Directors' Declaration. 
E)  None of the given answers.

Question 16

Cavalier Co Ltd is being sued for negligence in manufacturing a piece of equipment that has allegedly resulted in injury to an employee of the claimant business.The accident occurred after reporting date,but Cavalier has settled quickly so the outcome is now known before the authorisation date of the financial statements.The settlement is for a material amount.How should this transaction 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, as the outcome is complete and known before the time of completion of the reports. 
C)  No reporting is required. 
D)  event should be disclosed in a note to the financial statements and the event should be fully reflected in the financial statements, as the outcome is complete and known before the time of completion of the reports. 
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, as the outcome is complete and known before the time of completion of the reports. 
C)  No reporting is required. 
D)  event should be disclosed in a note to the financial statements and the event should be fully reflected in the financial statements, as the outcome is complete and known before the time of completion of the reports. 
E)  None of the given answers.

Question 17

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?

Accepted Answer

A)  If the loan is material and the effect on the future financial performance of the entity is significant, AASB 110 requires the directors to disclose the event in the Director's Report and incorporate it into the financial statements. 
B)  The directors are required to disclose the event in the Directors' Declaration. 
C)  No note disclosure is required in this case. 
D)  Note disclosure of the event, the fact that it occurred after reporting date and its financial effect on the company should be provided. 
E)  None of the given answers. 
A)  If the loan is material and the effect on the future financial performance of the entity is significant, AASB 110 requires the directors to disclose the event in the Director's Report and incorporate it into the financial statements. 
B)  The directors are required to disclose the event in the Directors' Declaration. 
C)  No note disclosure is required in this case. 
D)  Note disclosure of the event, the fact that it occurred after reporting date and its financial effect on the company should be provided. 
E)  None of the given answers.

Question 18

An adjusting event is one that:

Accepted Answer

A)  Occurred before the auditor signed the audit report. 
B)  Provides additional evidence of or information about conditions that existed at the reporting date. 
C)  Occurs after reporting date and relates to impacts that will occur before the time of completion. 
D)  Provides additional evidence of or information about conditions that existed at the time of completion. 
E)  None of the given answers. 
A)  Occurred before the auditor signed the audit report. 
B)  Provides additional evidence of or information about conditions that existed at the reporting date. 
C)  Occurs after reporting date and relates to impacts that will occur before the time of completion. 
D)  Provides additional evidence of or information about conditions that existed at the time of completion. 
E)  None of the given answers.

Question 19

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

Accepted Answer

A)  I, II and III 
B)  II, III and IV; 
C)  I, II and VI; 
D)  III, IV and V; 
E)  III, V and VI 
A)  I, II and III 
B)  II, III and IV; 
C)  I, II and VI; 
D)  III, IV and V; 
E)  III, V and VI

Question 20

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

A) True 
 B)False

Exam 24: Events Occurring After Balance Sheet Date

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

If an adjusting event that occurs after balance sheet date is considered to be immaterial,AASB 110 requires that the entity:

The requirements of AASB 110 for additional disclosures in the face of going-concern difficulties revealed after balance sheet date have been argued to be so extensive that they add financial pressure to a business already in financial distress:

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

AASB 110 specifies that adjusting events should be considered against two criteria to determine their treatment.The two criteria are:

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.

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:

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

The period covered by AASB 110 "Events occurring after balance sheet date" is from?

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

A non-adjusting event is one that occurs:

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?

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

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

An adjusting event is one that:

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.

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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