CASE STUDY 1

Facts
The preparation of the financial statements of Excellent Corp. for the accounting period ended
December 31, 2009, was completed by the management on March 15, 2010. The draft financial
statements were considered at the meeting of the board of directors held on March 20, 2010,
on which date the board approved them and authorized them for issuance. The annual general
meeting (AGM) was held on April 10, 2010, after allowing for printing and the requisite notice
period mandated by the corporate statute. At the AGM the shareholders approved the financial
statements. The approved financial statements were filed by the corporation with the Company
Law Board (the statutory body of the country that regulate corporations) on April 20, 2010.
Required:
1) Given these facts, what is the “authorization date” in terms of IAS 10?
Solution:
The Date of authorization of the financial statements of Excellent Corp. for the year ended
December 31, 2009, is March 2010, the date when the board approved them and authorized
them for issue (and not the date they were approved in the AGM by the shareholders). Thus,
all post – reporting period events between December 31, 2009 and March 20, 2010, need to
be considered by Excellent Corp. for the purposes of evaluating whether they are to be
accounted for or reported under IAS 10.

2) Suppose on the above case the management of Excellent Corp was required to issue the
financial statement to a supervisory boards consisting mainly of non excecutive including
representative of trade union. The management of Excellent Corp had issued the draft of
financial statement to the supervisory board approved them on March 17, 2010 and the
shareholders approved them in the AGM held on April 10, 2010. The approved financial
statement filed with the company law board on April 20, 2010. (beda soal)
Solution:
The date of authorization of financial statement would be March 16, 2010, the date the draft
financial statement were issued to the supervisory board. So all events between December
31, 2009 and March 16, 2010 need to be considered for the purpose of evaluating whether
they are to be accounted for or reported under IAS 10.

CASE STUDY 2
Facts
Shiny Corp. carries its inventory at the lower of cost and net realizable value. At December 31,
2009, the cost of inventory, determined under the FIFO method, as reported in its financial
statements for the year then ended, was $10 million. Due to severe recession and other negative
economic trends in the market, the inventory could not be sold during the entire month of
January 2010. On February 10, 2010, Shiny Corp. entered into an agreement to sell the entire
inventory to a competitor for $6 million.
Required:
1) Persuming the financial statements were authorized for issuance on February 15, 2010,
should Shiny Corp. recognize a write-down of $4 million in the financial statements for the
year ended December 31, 2009?
Solution:
Shiny Corp should recognize a write down of and $4 million in financial statement for the
year ended December 31, 2009.
2) The capital of Shiny Corp comprised 100.000 equity shares. The company announced a
bonus issue of 25.000 shares on February 15, 2010. Financial Statement was authorised for
issue on March 10, 2010.
Solution:
IAS 33, EPS requires a disclosure of transactions as “stock splits” or rights issue which are
significant importance after the reporting period. This is a non adjusting event and only
disclosure is needed.

CASE STUDY 3
Facts
During the year 2009, Tac Corp. was sued by a competitor for $15 million for infringement of
a trademark. Based on the advice of the company’s legal counsel, Taj Corp accured the sum of
$10 million as a provision in its financial statements for the year ended December 31, 2009.
Subsequent to the end of the reporting period, on February 15 2010, the Supreme Court of the
country decided in favour of the party alleging infringement of the trademark and ordered the
defendant (Taj Corp.) to pay the aggrieved party a sum of $14 million. The financial statements
were prepared by the company’s management on January 30, 2010, and approved by the board
on Feburary 20, 2010.
Required:
Should Taj Corp. adjust its financial statements for the year ended December 31, 2009?
Solution:
Taj Corp. should adjust the provision upward by $4 million to reflect the award decreed by the
Supreme Court (assumed to be the final appellate authority on the matter in this example) to
be paid by Taj Corp. to its competitor.
Had the judgment of the Supreme Court been delivered on February 25, 2010, or later, this
post-reporting period event would have occured after the cut-off point (i.e. the date the financial
statements were authorized for organizational issuance). If so, adjustment of financial
statements would not have been required.

Adjusting event
 Bankruptcy of customer case 4-1
 Sale of inventory at lower price case 2-1
 The sale of PPE for a net selling price lower than CA is indicative of an impairment before
the end of reporting period.
 The determination incentive or bonus payment after the reporting period when an entity has
a constructive obligation at the end of reporting period.
 A deteriorative in the financial position (recurring losses) and working capital deficiencies
(berhubungan dengan going concern).

Non-adjustment
 Declaration of an entity dividend: case 2-2 or case 4-2
 Decline in the market value of an investment after the reporting period.
 Major purchase commitments in the form of issuing guarantee is after the reporting period.
 Classification of assets held for sale after the reporting period.
 Commencing a lawsuit relating to events that occured after the reporting period.
CASE STUDY 4
The statutory audit of ABC Ic. for the year ended Juni 30, 2004, was completed on Aug 30,
2009. The fnancial statement were signed by the managing director on Sep 8, 2009, and
approved by the shareholders on Oct 10, 2009. The following 3 post-reporting period events
have occured:
a. On July 15, 2009 a customer owing $900,000 to ABC Inc filed for bankruptcy. The financial
statement include an allowance for doubtful debts pertaining to this customer of only
$50,000.
b. ABC Inc’s issued capital comprised 100,000 equity shares. The company announced a
bonus issue of 25,000 shares on Aug 1, 2009.
c. Specialized equipment costing $545,000 purchased on Mar 1, 2009 was destroyed by fire
on June 13, 2009. On June 30, 2009 ABC Inc. has booked a receivable of $400,000 from
the insurance company pertaining to this claim. After the insurance company completed its
investigation, it was discovered that the fire took place due to negligence of the machine
operator. As a result, the insurer’s liability was zero on this claim by ABC Inc.

Required: How should ABC Inc. account for these 3 post-reporting period events?
1. ABC Inc. should increase its allowance for doubtful debts to $900,000 because the
customer’s bankruptcy is an indicate of a financial condition that existed at the end of the
reporting period. This is an “adjusting event”.
2. IAS 33. Earnings per share requires a disclosure of transactions as “stock split” or “right
issue” which are significant importance after the reporting period. This is non-adjusting
event and only disclosures are needed.
3. This is adjusting events because it related to an asset that was recognized at the end of
reporting period. However as the insurance company’s liability is zero, ABC Inc must adjust
its receivable on the claim to zero.
Facts 01
The preparation of the financial statements of Excellent Corp. for the
accounting period ended December 31, 2009, was completed by the
management on March 15, 2010. The draft financial statements were
considered at the meeting of the board of directors held on March 20,
2010, on which date the board approved them and authorized them for
issuance. The annual general meeting (AGM) was held on April 10,
2010, after allowing for printing and the requisite notice period
mandated by the corporate statute. At the AGM the shareholders
approved the financial statements. The approved financial statements
were filed by the corporation with the Company Law Board (the
statutory body of the country that regulate corporations) on April 20,
2010.
Required:
1) Given these facts, what is the “authorization date” in terms of IAS
10?
Solution:
The Date of authorization of the financial statements of Excellent Corp.
for the year ended December 31, 2009, is March 2010, the date when
the board approved them and authorized them for issue (and not the
date they were approved in the AGM by the shareholders). Thus, all
post – reporting period events between December 31, 2009 and March
20, 2010, need to be considered by Excellent Corp. for the purposes of
evaluating whether they are to be accounted for or reported under IAS
10.
2) Suppose on the above case the management of Excellent Corp was
required to issue the financial statement to a supervisory boards
consisting mainly of non excecutive including representative of
trade union. The management of Excellent Corp had issued the draft
of financial statement to the supervisory board approved them on
March 17, 2010 and the shareholders approved them in the AGM
held on April 10, 2010. The approved financial statement filed with
the company law board on April 20, 2010. (beda soal)
Solution:
The date of authorization of financial statement would be March 16,
2010, the date the draft financial statement were issued to the
supervisory board. So all events between December 31, 2009 and
March 16, 2010 need to be considered for the purpose of evaluating
whether they are to be accounted for or reported under IAS 10.
CASE STUDY 2
Facts
Shiny Corp. carries its inventory at the lower of cost and net realizable
value. At December 31, 2009, the cost of inventory, determined under
the FIFO method, as reported in its financial statements for the year
then ended, was $10 million. Due to severe recession and other negative
economic trends in the market, the inventory could not be sold during
the entire month of January 2010. On February 10, 2010, Shiny Corp.
entered into an agreement to sell the entire inventory to a competitor
for $6 million.
Required:
3) Persuming the financial statements were authorized for issuance on
February 15, 2010, should Shiny Corp. recognize a write-down of
$4 million in the financial statements for the year ended December
31, 2009?
Solution:
Shiny Corp should recognize a write down of and $4 million in
financial statement for the year ended December 31, 2009.
CASE STUDY 3
Facts
During the year 2009, Tac Corp. was sued by a competitor for $15
million for infringement of a trademark. Based on the advice of the
company’s legal counsel, Taj Corp accured the sum of $10 million as a
provision in its financial statements for the year ended December 31,
2009. Subsequent to the end of the reporting period, on February 15
2010, the Supreme Court of the country decided in favour of the party
alleging infringement of the trademark and ordered the defendant (Taj
Corp.) to pay the aggrieved party a sum of $14 million. The financial
statements were prepared by the company’s management on January
30, 2010, and approved by the board on Feburary 20, 2010.
Required:
Should Taj Corp. adjust its financial statements for the year ended
December 31, 2009?
Solution:
Taj Corp. should adjust the provision upward by $4 million to reflect
the award decreed by the Supreme Court (assumed to be the final
appellate authority on the matter in this example) to be paid by Taj
Corp. to its competitor.
Had the judgment of the Supreme Court been delivered on February 25,
2010, or later, this post-reporting period event would have occured after
the cut-off point (i.e. the date the financial statements were authorized
for organizational issuance). If so, adjustment of financial statements
would not have been required.
Adjusting event
 Bankruptcy of customer case 4-1
 Sale of inventory at lower price case 2-1
 The sale of PPE for a net selling price lower than CA is indicative
of an impairment before the end of reporting period.
 The determination incentive or bonus payment after the reporting
period when an entity has a constructive obligation at the end of
reporting period.
 A deteriorative in the financial position (recurring losses) and
working capital deficiencies (berhubungan dengan going concern).
Non-adjustment
 Declaration of an entity dividend: case 2-2 or case 4-2
 Decline in the market value of an investment after the reporting
period.
 Major purchase commitments in the form of issuing guarantee is
after the reporting period.
 Classification of assets held for sale after the reporting period.
 Commencing a lawsuit relating to events that occured after the
reporting period.
CASE STUDY 4
The statutory audit of ABC Ic. for the year ended Juni 30, 2004, was
completed on Aug 30, 2009. The fnancial statement were signed by
the managing director on Sep 8, 2009, and approved by the
shareholders on Oct 10, 2009. The following 3 post-reporting period
events have occured:
a. On July 15, 2009 a customer owing $900,000 to ABC Inc filed
for bankruptcy. The financial statement include an allowance for
doubtful debts pertaining to this customer of only $50,000.
b. ABC Inc’s issued capital comprised 100,000 equity shares. The
company announced a bonus issue of 25,000 shares on Aug 1,
2009.
c. Specialized equipment costing $545,000 purchased on Mar 1,
2009 was destroyed by fire on June 13, 2009. On June 30, 2009
ABC Inc. has booked a receivable of $400,000 from the
insurance company pertaining to this claim. After the insurance
company completed its investigation, it was discovered that the
fire took place due to negligence of the machine operator. As a
result, the insurer’s liability was zero on this claim by ABC Inc.
Required: How should ABC Inc. account for these 3 post-reporting
period events?
1. ABC Inc. should increase its allowance for doubtful debts to
$900,000 because the customer’s bankruptcy is an indicate of a
financial condition that existed at the end of the reporting period.
This is an “adjusting event”.
2. IAS 33. Earnings per share requires a disclosure of transactions
as “stock split” or “right issue” which are significant importance
after the reporting period. This is non-adjusting event and only
disclosures are needed.
3. This is adjusting events because it related to an asset that was
recognized at the end of reporting period. However as the
insurance company’s liability is zero, ABC Inc must adjust its
receivable on the claim to zero.

4) The capital of Shiny Corp comprised 100.000 equity shares. The

company announced a bonus issue of 25.000 shares on February 15,
2010. Financial Statement was authorised for issue on March 10,
2010.
Solution:
IAS 33, EPS requires a disclosure of transactions as “stock splits” or
rights issue which are significant importance after the reporting period.
This is a non adjusting event and only disclosure is needed.

CASE STUDY 2
Facts
Shiny Corp. carries its inventory at the lower of cost and net realizable
value. At December 31, 2009, the cost of inventory, determined under
the FIFO method, as reported in its financial statements for the year
then ended, was $10 million. Due to severe recession and other negative
economic trends in the market, the inventory could not be sold during
the entire month of January 2010. On February 10, 2010, Shiny Corp.
entered into an agreement to sell the entire inventory to a competitor
for $6 million.
Required:
1) Persuming the financial statements were authorized for issuance on
February 15, 2010, should Shiny Corp. recognize a write-down of
$4 million in the financial statements for the year ended December
31, 2009?
Solution:
Shiny Corp should recognize a write down of and $4 million in
financial statement for the year ended December 31, 2009.

2) The capital of Shiny Corp comprised 100.000 equity shares. The

company announced a bonus issue of 25.000 shares on February 15,
2010. Financial Statement was authorised for issue on March 10,
2010.
Solution:
IAS 33, EPS requires a disclosure of transactions as “stock splits” or
rights issue which are significant importance after the reporting period.
This is a non adjusting event and only disclosure is needed.