Chapter 23 Key A decline in market value of investments between the reporting date and the date the financial report is authorised for issue is typically an adjusting event. FALSE chapter Chapter 23 #1 Ditty: Easy Section: 2302 Types of events after the reporting peioa ‘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. FALSE chapter - Chapter 23 92 Ditty: Easy Section: 2302 Types of evens after the reporting period 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. TRUE chapter - Chapter 233 Ditty: Easy Section: 2302 Types of evens after the reporting perioaDividends declared after the reporting date but before the authorisation for issue of the financial report are typically recognised as a liability. FALSE Chapter - Chapter 2324 Ditty: edurn Section: 2302 Types of evens after the reporting perioa Bonus payments that are part of an existing agreement with employees determined after the reporting date is an example of an adjusting event. TRUE Chapter - Chapter 2325 Ditty: Easy Section: 2302 Types of evens after the reporting period 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. FALSE Chapter Chapter 23.26 Ditty: Easy Section: 2302 Types of evens after the reporting period Only material events should be considered for events occurring after balance date. FALSE Chapter ~ Chapter 2327, Ditty: Easy Section: 2302 Types of evens after the reporting period10. 11 An event occurring after reporting 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. TRUE Chapter Chapter 23.28, Ditty: Easy Section: 23.01 What isan event after the reporting period? Reporting date may occur 2 or 3 months after reporting date. FALSE Chapter Chapter 23 28, Ditty: Easy Section: 23.01 What isan event after the reporting period? The Directors’ Declaration includes a statement that the entity can pay its debts as they fall due. TRUE Chapter ~ Chapter 23 16 Ditty: Easy Section: 23.01 What isan event after the reporting period? The Directors’ Declaration must be signed before the reporting date. FALSE Chapter - Chapter 23 211 Ditty: Easy Section: 23.01 What isan event after the reporting period?12 B 14, 15, Events after reporting date should not be disclosed because the statement of financial position is‘as at’ a particular date FALSE Chapter - Chapter 23212 Ditty oxy Seaton 23.0) Wht isan ever ter the reporting period? In general a subsequent event is one that occurs, or the occurrence of which becomes known, after the reporting date. TRUE Chapter - Chapter 23.13 Diticuty Easy Section: 2302 Types of events after the reporting pera AASB 110 treats after-reporting-period assessments of the going concern basis of accounting as adjusting entries TRUE Chapter - Chapter 23 18 Ditty: Medurn Section: 2302 Types of events after the reporting perioa ‘AASB 110 requires the financial statements to be restated to a liquidation basis and for extensive additional disclosures to be made when a change in going concern status occurs after reporting date TRUE Chapter Chapter 23215 Ditty: Easy16. 17 18, 19, Section 23.02 Types af event ater the reporting peso Requirements regarding events after the reporting date are contained in AASB 110 and The Corporations Law. TRUE Chapter ~ Chapter 2316 Ditty: Easy Section: 23.01 What i an event after the reporting period? Dividends declared and proposed after reporting date may be recognised as a liabllty and this is consistent with AASB 110. FALSE chapter - Chapter 232817 italy: Easy Section: 2302 Types of events after the reporting peioa In AASB 110 Events After the Reporting Period, a contingent liability is an example of an adjusting event. FALSE Chapter ~ Chapter 23 18 Ditty: Easy Section: 2302 Types of evens after the reporting perioa In AASB 110 Events After the Reporting Period, a legal claim that has subsequently been settled is an example of an adjusting event. TRUE Chapter ~ Chapter 23 18 Ditty: Easy20, 24 22, Section’ 2302 Types of events ater the reporting period If non-adjusting events after the reporting date are material, non-disclosure could influence the economic decisions that users make based on the financial statements TRUE Chapter - Chapter 23 #26 Ditty: Easy Section 23.03 Disclosure requrernents The period covered by AASB 110 Events After the Reporting Periods from: > 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. Chapter - Chapter 23201 Ditty: Easy Section: 23.01 What isan event after the reporting period? The ‘authorisation date’ of the financial reports of companies is: A. the date the auditor prepares the audit report, the date on which the printing of the reports is completed or they are posted on a website a C. the date the reports are posted to stakeholders. 9 ), the date the Directors’ Declaration is signed Chapter - Chapter 23 #22 Ditty: Easy Section: 23.01 What isan event after the reporting period?23, 24. After the auditor has signed the audit report the next step in the process is to’ A. print and distribute the reports. B. have the directors sign the Directors’ Declaration. C. prepare the financial statements. D. prepare the notes to the accounts. Chapter - Chapter 23 #23 Ditty: Easy Section: 23.01 What isan event after the reporting period? The ‘authorisation date’ for entities that are not companies is: ‘A. when the auditor signs the audit report. 8. 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. chapter Chapter 23 #24 Ditty: Easy Section: 23.01 Whats an event after the reporting period?25, 26. Reporting events after reporting date is concerned with: A. information that becomes available between the date the reports are completed and the date the auditor signs the audit report. 8. 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 that occur or about which information becomes available between reporting date and time of completion. D. events or transactions that occur or about which information becomes available between reporting date and reporting period date Chapter - Chapter 23 #25 Ditty: Easy Section: 23.01 What isan event after the reporting period? Ifit 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 A, Adjust the balance of accounts receivable and write off the bad debt and make a note disclosure that this event occurred after reporting date. B, Adjust the balance of accounts receivable and write off the bad debt. C. Disclose the event in the notes to the accounts. D. Do nothing this period but write the debt offin the accounts for the next period. chapter - Chapter 23226 Ditty: Easy Section: 2302 Types of evens after the reporting period27. 28, If an event or transaction that occurs after reporting date does not relate to conditions that existed at reporting date then: A. No action should be taken to report the event or transaction in the financial reports. 8. The statement of financial position should not be adjusted but effects on the statement of comprehensive income should be reflected in that statement. A 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. Chapter ~ Chapter 23.427 Ditty: Easy Section: 2302 Types of evens after the reporting period A non-adjusting event is one that occurs: A. after the reporting date. 8. after the auditor has signed the audit report. C. after the completion of the financial reports. D. after the financial statements have been distributed Chapter - Chapter 23228 Ditty: Easy Section: 2302 Types of evens after the reporting perioa29, 30, ‘An adjusting event is one that: > occurs before the auditor signed the audit report. I= provides additional evidence of or information about conditions that existed at the reporting date. A 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. Chapter - Chapter 23228 Ditty: Easy Section: 2302 Types of events after the reporting peioa AASB 110 requires that adjusting events that meet two broad criteria should be: 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. 8. always disclosed by way of a note to the financial statements C. disclosed as a contingent liability, if an unfavourable event D. reflected in the financial statements, if an unfavourable event; disclosed by way of note, if a favourable event. Chapter - Chapter 23 #36 Ditty: Easy Section: 23.01 What isan event after the reporting period?31 32, AASB 110 specifies that adjusting events should be considered against two criteria to determine their treatment. The two criteria are A. (a) provides an indication that conditions may have existed at reporting date; or (b) reveals additional solid evidence of a condition that existed at reporting date 8. (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 Chapter chapter 2331 Diticaly Easy Section: 23.0 Types of events ater the reporting pera Banksia Ltd is in the process of completing its financial reports for the period ended 30 June 2014 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. What treatment is required by AASB 110 for this item? A. No disclosure is required because the information is publicly available. 8. The potential effect on the accounts should be disclosed in the notes to the financial statements. G. If material, the financial statements should be adjusted to refiect the impact of the event. D. An adjustment to the statement of comprehensive income should be made, but only note disclosure for the statement of financial position since it is prepared as at the reporting date. Chapter Chapter 23432 Ditty: Medurn Section: 23.02 Types of events after the reporting perioa33, 34. Wattle Ltd is in the process of completing its financial reports for the period ended 30 June 2014 when its accountant completes the collection of information about the realisable value of inventory as at reporting date. A number of items are reflected at a cost greater than net realisable value with a material effect on the accounts. What treatment does AASB 110 require for this event? > It should be disclosed in the Directors’ Declaration. The effect on the accounts should be disclosed in the notes to the financial statements. a No disclosure is required, D. The financial statements should be adjusted to reflect the impact of the event. Chapter Chapter 23433 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa A non-adjusting event is one that: A. provides evidence about new conditions that did not exist at reporting date 8. 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. hapter- Chapter 25234 Ditty: Easy Section: 2302 Types of evens after the reporting perioa35, 36. In the case of a non-adjusting event, AASB 110 requires it to be: 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 ifit is material C. disclosed as a contingent liability, if an unfavourable material event. D. reflected in the financial statements, if an unfavourable material event; disclosed by way of note, if a favourable event. Chapter - Chapter 23235 Ditty: Easy Section: 2302 Types of evens after the reporting period The disclosures AASB 110 requires for a material non-adjusting event include A. the financial effect of the event or, where it is not possible to estimate the effect reliably, a statement to that effect. 8. a description of why the event only came to be known of after reporting date. A details of the corporate governance procedures in place to ensure that further information regarding the event is gathered in a timely fashion D. the financial effect of the event or, where it is not possible to estimate the effect reliably, a statement to that effect and a description of why the event only came to be known of after reporting date. Chapter - Chapter 23 #38 Ditty: Easy Section 23.03 Disclosure requirements37, 38, The disclosures AASB 110 requires for material non-adjusting events include: 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. A a statement that the event occurred after reporting date Ip all of the given answers, Chapter - Chapter 23237 Ditty: Easy Section 23.03 Disclosure requirements AASB 110 requires additional disclosures in which of the following situations? A. related party transactions that affect the ability of the entity to trade profitably and that occur after reporting date Ip any event that occurs after the reporting date that would cause the entity to no longer be considered a going concern A 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 Chapter - Chapter 23 #38 Ditty: Easy Section: 2302 Types of evens after the reporting period39, 40. 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? A, additional extensive disclosure of the realisation value of assets and the amounts at which liabilities are expected to be settled B. recognition of the assets in the financial statements at fair value and the liabilities reported at their settlement amounts A additional extensive disclosures about the timing and maturity date of debts and the cash flow shortfalls expected D. recasting of the financial statements using fair value basis Chapter - Chapter 23 #35 Ditty: Easy Section: 2302 Types of evens after the reporting period Disclosures required by AASB 110 relating to subsequent events that affect on the going concern status of the entity include: > the period over which the entity is expected to be able to continue trading assets for which the going concer basis is not appropriate, the carrying amounts and the Ie amounts for which the assets are expected to be realised. C. the directors’ proposal for action to address the difficulties that have emerged since reporting date. D. the period over which the entity is expected to be able to continue trading and assets for which the going concem basis is not appropriate, the carrying amounts and the amounts for which the assets are expected to be realised. chapter Chapter 234641 Ditcuty: Easy Section: 2302 Types of events after the reporting perioa 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: 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. 8. 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. Itis 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 isnot 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 Chapter - Chapter 23241 Ditty: Easy Section: 2302 Types of evens after the reporting period42. Requirements other than those in AASB 110 regarding after-reporting-date events include A. The AASB Framework requirement that the financial staternents fully reflect all financial effects either through note disclosure or recognition in the financial statements of any events that occur up to the date of completion. Ie The Corporations Law requirement that a company's directors must give details in their report of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect, the entity's operations or the result of those operations or state of affairs in future financial years. A The Corporations Law regulations regarding the conduct of an audit that requires auditors to qualify any set of financial statements that do not fully incorporate either in note disclosure or full recognition in the financial statements all events up to the signing of the audit report. D. AASB Framework requires that the financial statements fully reflect all financial effects either through note disclosure or recognition in the financial statements of any events that occur up to the date of completion and The Corporations Law requirement that a company's directors must give details in their report of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect, the entity's operations or the result of those operations or state of affairs in future financial years. chapter Chapter 2342 Ditty: Easy Section 23.03 Disclosure requirements43. Gowanland Co Ltd is being sued over damage to farmland as a result of an accident in which poisonous chemicals were mixed with fertiliser. At reporting date there was no information about the court decision and a contingent liabllity had been disclosed, Subsequent to the reporting date, the court handed down its decision and upheld a substantial claim for damages. According to AASB 110 how should this event be treated in the financial statements? A, The contingent liability note should be extended to provide additional information based on the after-reporting-date event. B. The contingent liability note should remain as it is because it reflects the situation existing at reporting date. G. The contingent liability can now be measured reliably and is no longer contingent, so it should be recognised in the financial statements as a provision. D. The treatment would depend on whether or not the entity had received advice from solicitors regarding the likely success of an appeal chapter Chapter 23 843 Difieuty: Medurn Section: 23.02 Types of events after the reporting perioa45. 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? 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. No reporting is required. D. The event should be disclosed in a note to the financial statements and fully reflected in the financial statements as the outcome is complete and known before the time of completion of the reports. chapter - Chapter 23248 Ditty: Medurn Section: 2302 Types of evens after the reporting period Subsequent to the reporting 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? 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. Chapter ~ Chapter 2345 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa46. 41. 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? A The foreign currency debt should be restated at the new exchange rates and the loss recognised. B. No reporting is required. ©. Harrier Ltd's bank and/or debenture trustees should be notified of the potential that the company may break its debt covenant. D, A note disclosure of the event should be made. hapter- Chapter 23246 Difieuty: Medurn Section: 2302 Types of evens after the reporting perioa Yandalup Ltd has a series of outback cattle stations. Subsequent to reporting date it is discovered that flooding before reporting 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? A. No disclosure is required B, The event's financial effect should be recognised in the financial statements for the period C. The event's effect on the entity should be included in note disclosure D. Disclosure of the event in the Directors’ Declaration is required. Chapter chapter 23247 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa48. 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? 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 required. 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. chapter - Chapter 25245 Difieuty: Medurn Section: 2302 Types of evens after the reporting perioa49. 50. 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? > Ifthe 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. 8. The directors are required to disclose the event in the Directors’ Declaration. a C. No note disclosure is required in this case. The even should be disclosed in a note, the fact that it occurred after reporting date and its financial effect on the company should be provided Chopter- chapter 23.848 Difiaty: Meda Section: 23.0 Types of events ater the reporting perio 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? A. The account receivable should be written off. 8. 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. Chapter - Chapter 23 #5651 52. Ditty: Mediuen Section: 2302 Types of evens after the reporting period Which of the following material after reporting date events is considered an adjusting event? 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 A decline in market value of investments between reporting date and the date when the financial report is authorised for issue D. 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 chapter - Chapter 23251 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa Which of the following material after-reporting-date events is not considered an adjusting event? 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 A determination after the reporting date the amount of bonus payment payable to senior executives ie] ), destruction of assets due to fiood after the reporting date Chapter - Chapter 23 #52 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa53. 54, Which of the following material after-reporting-date events is not considered a non-adjusting event? A. amajor business combination after the reporting date 8. destruction of a major production plant by fire after reporting date C. changes in tax rates or tax laws enacted or announced after the reporting date D. bonus payments determined after the reporting date Chapter Chapter 23453 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa Which of the following material after-reporting-date events is not considered a non-adjusting event? A. amajor acquisition of capital assets after the reporting date destruction of inventory by vandals after the reporting date . changes in tax rates or tax laws enacted or announced after the reporting date 9 ), destruction of inventory on consignment by vandals before the reporting date chapter Chapter 23 #54 Ditty: Medurn Section: 23.01 What isan event after the reporting period?55. 56, Which of the following material after-reporting-date events is a non-adjusting event? A. major disposal of assets before the reporting date B. expropriation of assets by government before the reporting date G 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 Chapter - Chapter 23455 icy Median Secon’ 23.02 Types of events ater thereporing pero If an adjusting event that occurs after reporting date is considered to be immaterial AASB 110 requires that the entity: A. must disclose the nature of the event and a statement that an estimate of the financial effects cannot be made. 8. must recognise the event at balance date. C. need not recognise nor disclose the event. >. must recognise the event at balance date and need not recognise nor disclose the event. chapter ~ chapter 23456 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa57. 58. Ifit 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: 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. prepare its financial report on a going concer basis and ask the auditor to indicate in the opinion the breach of the going concern basis. D. prepare the financial reports adopting a fundamental change in the basis of accounting, say use of liquidation values instead of modified historical cost basis. Chapter - Chapter 23257 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa Birong Ltd. issued 2 $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? > adjusting event; no disclosure necessary adjusting event; with appropriate disclosure A non-adjusting event; no disclosure necessary Ip ). non-adjusting event; with appropriate disclosure Chapter - Chapter 23 #58 Ditty: Medurn Section: 2302 Types of events after the reporting perioa59. The following are material events that occurred for Yorba Linda Ltd between the reporting date and the date when the financial report is authorised for issue. [Bankruptcy ofa customer that occurs after the reporting date T [Determination after the reporting date of the costs assets purchased before the reporting date il Decline in market value of investments alter the reporting date of investments purchased before the reporting date Vv Dividends declared after the reporting date V [A lawsuit filed by a customer after the reporting date wl Discovery of fraud that shows that the financial report is incorrect Which of the following options identify all the adjusting events for Yorba Linda Ltd, in accordance with AASB 110 Events After the Reporting Period? I, land ill UI, lll and IV CI llandvI D. Ill, IV and V Chapter - Chapter 23 #58 ifcuty Mediurn Section: 2302 Types of evens after the reporting period60. The following are material events that occurred for Virgil Ltd between the reporting date and the date when the financial report is authorised for issue. i [Bankruptcy ofa customer that occurs after the reporting date T [Determination after the reporting date of the costs assets purchased before the reporting date il Decline in market value of investments alter the reporting date of investments purchased before the reporting date Vv Dividends declared after the reporting date V [A lawsuit filed by a customer after the reporting date wl Discovery of fraud that shows that the financial report is incorrect Which of the following options identify all the non-adjusting events for Virgil Ltd, in accordance with AASB 110 Events After the Reporting Period? I, land ill UI, lll and IV CI, land VI D, Ill, IV and Chapter - Chapter 23 #66 ifcuty Mediurn Section: 2302 Types of evens after the reporting period61. The following are material events that occurred for Hervey Bay Ltd between the reporting date and the date when the financial report is authorised for issue. T [Acquisition of a major business competitor i Discovery of inventory tems damaged by floods before the reporting date TI Receipt of information after the reporting date indicating that an asset was impaired at reporting date Vv Settlement of a court case outstanding for many years that confirms that the entity had a present obligation at the reparting date Vv Major Itigation arising solely out of events that occurred after the reporting date wl Dividends declared before the reporting date but paid after the reporting date Which of the following options identify all the adjusting events for Hervey Bay Ltd, in accordance with AASB 110 Events After the Reporting Period? I, lll and VI B, Il, lll and VI C. Ill, IV, V and VI D.IV, Vand VI chapter - chapter ifcaty 261 Mediurn Section: 2302 Types of evens after the reporting period62, 63, The following are material events that occurred for Fraser Island Ltd between the reporting date and the date when the financial report is authorised for issue. T [Acquisition of a major business competitor i Discovery of inventory tems damaged by floods after the reporting date TI Receipt of information after the reporting date indicating that an asset was impaired at reporting date Vv Settlement of a court case outstanding for many years that confirms that the entity had a present obligation at the reparting date Vv Major Itigation arising solely out of events that occurred after the reporting date wl Dividends declared before the reporting date but paid after the reporting date Which of the following options identify all the non-adjusting events for Fraser Island Ltd, in accordance with AASB 110 Events After the Reporting Period? A.1,Il Ill and VI B. I, land V Cl, Ill and V D.Ill, IV and VI Chapter - Chapter 23 #62 Difeuty: Mediurn Section: 2302 Types of evens after the reporting period Which of the following indicators is not an example of an event that casts doubts on the going concern status of the business? A. a court decision with material damages against the business B, resignation of an employee C. recoverability of trade receivables during a recession D. denial of a significant credit line Chapter - Chapter 23 #6365, ity: Meche Secon’ 23.02 Types of event ater the reporting pero Which of the following statements is incorrect with respect to AASB 110 Events After the Reporting Period? ‘A. An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting date. 8. Ifan entity declares dividends to holders of equity instruments after the reporting date, the entity shall not recognise those dividends as a liability at the reporting date. C. An entity may prepare its financial statements on a going concern basis if management determines after the reporting date that it intends to go on voluntary liquidation. D. An entity shall not adjust the amounts recognised in its financial statements to reflect non- adjusting events after the reporting date. chapter- Chapter 23264 ical edn Seaton’ 23.02 Types of events ater the repring pero Which of the following indicators is not an example of an event that casts doubts on the going concern status of the business? A. a court decision with immaterial damages against the business 8. major uninsured fire damage C recoverability of trade receivables during a recession D. denial of a significant credit line Chapter - Chapter 23 #68 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa66. 67. fnew events or conditions indicate that the entity will not be able to continue as a going concern, the entity must: ‘A. treat this as an adjusting event and adjust the affected accounts in the financial report. 8. treat this as a non-adjusting event and discloses the reason for the breach of the going concern assumption. A 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. Ig ). disclose the assets and liabilities in the staternent of financial position on a liquidation basis. Chapter - Chapter 23 #68 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa The AASB 110 disclosure requirements for material non-adjusting events does not include: A. a description of each event. 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. A a statement that the event occurred after reporting date. D. All of the given choices are not required to be disclosed Chapter - Chapter 23267 Ditty: Medurn Section 23.03 Disclosure requirernents68. Which of the following events would be an example of an event that casts doubts on the going concern status of the business? A, several major customers find an alternative supplier B. resignation of an employee A forward payment to a major supplier ). directors decide on no final dividend Chapter - Chapter 23 #68 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa 69. _ Whats an ‘adjusting event’ in accordance with AASB 110? Provide examples. Chapter - Chapter 23 #68 Ditty: Medurn Section: 2302 Types of evens after the reporting perioa 70. What is a ‘non-adjusting event’ in accordance with AASB 110? Provide examples. Chapter - Chapter 23276 Ditty: Medurn Section: 2302 Types of evens after the reporting period71 Discuss the accounting treatment required in AASB 110 for dividends declared and proposed after reporting date. How does this differ from pre-AIFRS treatment? ‘AASB 110 requires that dividends proposed or declared after the end of the reporting period not be recognised as a liability in the statement of financial position. Specifically, paragraph 12 of the standard requires that: /fan entity declares dividends to holders of equity instruments (as defined in AASB 132 Financial Instruments: Presentation) after the reporting period, the entity shall not recognise those dividends as a liability at the end of the reporting period. In explaining the above requirements, paragraph 13 of AASB 110 states: /f dividends are declared after the reporting period but before the financial staternents are authorised for issue, the dividends are not recognised as a liability at the end of the reporting period because no obligation exists at that time. Such dividends are disclosed in the notes in accordance with AASB 101 Presentation of Financial Statements This requirement represents something of a departure from prior practice in Australia, Prior to 2005, if dividends were declared after the end of the reporting period they would be included in the liabilities of the reporting entity as at the end of the reporting period. That is, under the former treatment the declaration of dividends would have been treated as an ‘adjusting event’ For more information refer to ‘Dividends declared’ chapter - Chapter 23471 Ditty: Hara Section: 2302 Types of evens after the reporting period72. _ Ifan entity isno longer a going concern, AASB 110 requires that the financial reports be prepared on a liquidation basis. Discuss why this treatment is inconsistent with the treatment of non-adjusting events. Chapter - Chapter 23272 Ditty: Hara Section: 2302 Types of evens after the reporting period 73. Discuss the disclosure requirements for non-adjusting events as prescribed in AASB 110. Chapter - Chapter 23273 Ditty: Medurn Section 23.03 Disclosure requirernents74, Provide an example of an adjusting event and explain why this event satisfies the criteria of AASB 110 Events After the Reporting Period. Specifically, paragraph 8 of AASB 110 states that: An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period. For example, additional information might become available that enables those in charge of preparing the financial statements to estimate more accurately year-end provisions that are used in preparing financial statements. For instance, there might have been a legal claim outstanding at the end of the reporting period that has subsequently been settled, With this information, the year-end provision for this liability could be recorded reliably. Without the information, the potential obligation might be recorded in the notes to the financial statements as a contingent liability, For more information refer to ‘Events that necessitate adjustments to the financial statements’ Chapter - Chapter 23 #74 Ditty: Medurn Section: 2302 Types of evens after the reporting period75. Explain the period covered by AASB 110 Events After the Reporting Period and discuss how the period covered is determined. Events after the reporting period are defined at paragraph 3 of AASB 110 Events After the Reporting Period as: those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. The end of the reporting period can also be defined as the end of the financial year to which the financial statements relate. It is therefore what we would traditionally have referred to as balance sheet date or reporting date. The date when the financial statements are authorised for issue means, in the case of companies, the date the Directors’ Declaration is signed, which is typically the last thing @ company's directors do before the financial statements are released. For more information refer to ‘What is an “event after the reporting period Chapter - Chapter 23275 Ditty: Medurn Section: 23.01 What isan event after the reporting period?76. 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, Events after the reporting period are defined at paragraph 3 of AASB 110 Events After the Reporting Period as: those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial staternents are authorised for issue The purpose of the accounting standard on events occurring after the reporting period is to require the effect of material events occurring after the end of the reporting period to be included in the financial statements or accompanying notes, so that users entitled to rely on those financial statements are not misled. Again, itis stressed that if the event or transaction does not relate to any conditions that existed at the reporting date, it would generally be inappropriate to adjust the financial statements as they are meant to reflect conditions as at the end of the reporting period. Nevertheless, disclosure in the notes to the financial statements might be appropriate, depending on the materiality of the item in question. As we know, a statement of financial position in Australia is typically headed, ‘Statement of financial position as at 30 June 20XX'. If something material happens after 30 June, it would be inappropriate to alter the 30 June statement of financial position. The transaction or event would be reflected in the next period's financial statements. There is a general requirement that the statement of financial position and the statement of comprehensive income must be prepared on the basis of conditions existing at the end of the reporting period. Nevertheless, disclosure in the notes to the financial statements might in some circumstances be warranted when the new information pertains to a relevant transaction or event that reflects something that happened in the period after the end of the reporting period, but prior to the date the financial statements are authorised for issue. For more information refer to ‘What is an “event after the reporting period Chapter - Chapter 23276 Ditty: Hara Section: 23.01 What isan event after the reporting period?77. Discuss the two types of events after the reporting period chapter Chapter 23377 Ditty: Hara Section: 2302 Types of evens after the reporting perioa