Question 1

What is an 'adjusting event' in accordance with AASB 110?
 Provide examples.

Accepted Answer

The answer of What is an 'adjusting event' in accordance...

Question 2

Which of the following events would be an example of an event that casts doubts on the going concern status of the business?

Accepted Answer

A)  several major customers find an alternative supplier 
B)  resignation of an employee 
C)  forward payment to a major supplier 
D)  directors decide on no final dividend

Question 3

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

Accepted Answer

A)  a court decision with immaterial damages against the business 
B)  major uninsured fire damage 
C)  recoverability of trade receivables during a recession 
D)  denial of a significant credit line

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following material after-reporting-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

Question 6

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

A) True 
 B)False

Question 7

Discuss the two types of events after the reporting period.

Accepted Answer

The answer of Discuss the two types of events after...

Question 8

A non-adjusting event is one that:

Accepted Answer

A)  provides evidence about new conditions that did not exist at reporting date. 
B)  occurs before reporting date. 
C)  provides additional evidence of or information about conditions that existed at the reporting date. 
D)  occurs before the auditor signed the audit report.

Question 9

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

Accepted Answer

A)  when the auditor signs the audit report. 
B)  when the financial reports are signed off by the accountant in the presence of the auditor's representative. 
C)  when the financial reports are accepted by the taxation office. 
D)  when the reports are given final approval by the governing body or management of the entity, whichever is applicable.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Explain the period covered by AASB 110 Events After the Reporting Period and discuss the accounting treatment required by AASB 110 if a material event arises during this period.

Accepted Answer

The answer of Explain the period covered by AASB 110...

Question 13

Discuss the accounting treatment required in AASB 110 for dividends declared and proposed after reporting date.How does this differ from pre-AIFRS treatment?

Accepted Answer

The answer of Discuss the accounting treatment required in AASB...

Question 14

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

Accepted Answer

A)  The event is so significant in its effect on the economic decision making of general purpose financial statement users that it is vital that the financial statements be restated in the light of that information. 
B)  The ethical dilemma for accountants and accounting regulators is that by requiring more disclosure from an entity that is already in financial difficulty, the accountants may actually hasten the demise of a business. 
C)  It is not necessary to require the management of an entity to take action regarding its going concern status since it is the responsibility of the auditors to establish that going concern conditions exist. 
D)  It is not appropriate to adjust the assets and liabilities recognised in the financial statements because under The Corporations Law and SAC 2 the financial statements must provide operating results for the reporting and the financial position as at the end of the reporting.

Question 15

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

A) True 
 B)False

Question 16

Birong Ltd.issued a $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

Question 17

An adjusting event is one that:

Accepted Answer

A)  occurs 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.

Question 18

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 effect of the customer's insolvency. 
C)  No reporting is required. 
D)  The directors are required to disclose the event in the Directors' Declaration.

Question 19

Discuss the disclosure requirements for non-adjusting events as prescribed in AASB 110.

Accepted Answer

The answer of Discuss the disclosure requirements for non-adjusting events...

Question 20

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 statement of financial position should not be adjusted but effects on the statement of comprehensive income 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.

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

What is an 'adjusting event' in accordance with AASB 110? Provide examples.

Which of the following events would be an example of an event that casts doubts on the going concern status of the business?

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

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

Which of the following material after-reporting-date events is not considered an adjusting event?

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.

Discuss the two types of events after the reporting period.

A non-adjusting event is one that:

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

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

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

Explain the period covered by AASB 110 Events After the Reporting Period and discuss the accounting treatment required by AASB 110 if a material event arises during this period.

Discuss the accounting treatment required in AASB 110 for dividends declared and proposed after reporting date.How does this differ from pre-AIFRS treatment?

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

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.

Birong Ltd.issued a $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?

An adjusting event is one that:

Discuss the disclosure requirements for non-adjusting events as 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: