ExpertMedium2 marksMultiple Choice
ACCA · Question 31 · Preparing basic financial statements
Which of the following are considered 'adjusting events' under IAS 10 Events after the Reporting Period? (Select all that apply)
Which of the following are considered 'adjusting events' under IAS 10 Events after the Reporting Period? (Select all that apply)
Answer options:
A.
Bankruptcy of a major customer shortly after year-end, relating to a debt owed at year-end
B.
Destruction of a major factory by fire after year-end
C.
Discovery of a fraud that shows the financial statements are incorrect
D.
Announcement of a major restructuring plan after year-end
How to approach this question
Ask yourself: Did the condition exist at the reporting date? If yes, it's adjusting.
Full Answer
Adjusting events provide evidence of conditions that existed at the end of the reporting period. A customer going bankrupt confirms a receivable was bad at year-end. Discovery of fraud confirms the year-end figures were wrong. Fires and restructuring announcements relate to conditions arising after the reporting period.
Common mistakes
Thinking a major disaster like a fire must be adjusted because of its size (it is only disclosed).
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