Scribd
Upload
159 views2 pages

Tutorial Answer - Events After Reporting Period

1. The document discusses adjusting and non-adjusting events that occur after a reporting period. It provides examples of various post-period events and indicates whether they would require adjustment to the financial statements or not. 2. For Santong Berhad with a year-end of March 31, 2022, a board approval in February 2022 to discontinue an operation would not require adjustment since a formal announcement was not made until April 2022. 3. Evidence found during an audit on April 1, 2022 that inventory reported as of March 31, 2022 was stolen would be considered an adjusting event, since it provides evidence of a condition that existed at the end of the reporting period.

Uploaded by

Aisyah Othman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
159 views2 pages

Tutorial Answer - Events After Reporting Period

1. The document discusses adjusting and non-adjusting events that occur after a reporting period. It provides examples of various post-period events and indicates whether they would require adjustment to the financial statements or not. 2. For Santong Berhad with a year-end of March 31, 2022, a board approval in February 2022 to discontinue an operation would not require adjustment since a formal announcement was not made until April 2022. 3. Evidence found during an audit on April 1, 2022 that inventory reported as of March 31, 2022 was stolen would be considered an adjusting event, since it provides evidence of a condition that existed at the end of the reporting period.

Uploaded by

Aisyah Othman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Tutorial Events after Reporting Period

Question 1

State whether the followings are adjusting/non-adjusting events

Events Answer

1. The destruction of an asset by fire or similar Non adjusting Events


post year end

2. Dividends declared after the year end Non adjusting Events

3. Debtor goes bankcrupt 5 days after SFP date (This is evidence that debtor was
. bad at SFP date also)

Adjusting Event
4. Stock is sold at a loss 2 weeks after SFP date Adjusting Event

5. Property gets impaired 3 weeks after SFP (This implies that the property was
date impaired at the SFP date also)

Adjusting Event
6. The result of a court case confirming the Adjusting Event
company did have a present obligation at the
year end

7. Stock is sold at a loss because they were (This is evidence that they were
damaged post year-end fine at the year-end - so no
adjustment)

Non adjusting Events


8. Property impaired due to a fall in market (This is evidence that the property
values generally post year end value was fine at the year end - so
no adjustment required).

Non adjusting Events


9. The settling of a purchase price for an asset Adjusting Event
that was bought before the year end but the
price was not finalised

10. The acquisition or disposal of a subsidiary Non adjusting Events


post year end
11. A formal plan issued post year end to Non adjusting Events
discontinue a major operation

Question 2

Santong Berhad closes its account on 31 March every year. In April 2022, a public
announcement was made regarding its plan to discontinue operation which had been
approved by the board in February 2022. Discuss if the event should be adjusted after the
reporting period 31 March 2022. Provide justification to your answer.

Answer:

A board decision to discontinue an operation does not create a liability. A provision can only be made
on the announcement of a formal plan (as it then raises a valid expectation that the discontinuance
will be carried out). As this announcement occurs during the year ended 31 March 2023, this a non-
adjusting event for the year ended 31 March 2022

Question 3

Santong Berhad closes its account on 31 March every year. During the audit on 1 April 2022,
the auditor found substantial evidence that RM35,000 of goods which were listed as part of
the inventory in the statement of financial position as at 31 March 2022 had been stolen.
Discuss if this is an adjusting or non-adjusting event.

Question 4

Survivor Berhad is an international corporation operating in the hotel industry. The company
was affected badly during Covid19 pandemic. The resulting impact of the virus on the
operations and measures taken by various governments to contain the virus have negatively
affected the group’s results in the reporting period. The currently known impacts of COVID-
19 on the group are a decline in revenues in 2020; impairments of receivables and
investors, closures of group production and sales located in Wu Han, China; restructuring of
the sales division in certain countries and a significant delay in the operations of a new
segment in Argentina. The accountant estimated a material uncertainty affecting the entity’s
ability to continue as a concern. Survivor Berhad closes its account on 31 December every
year. By referring to MFRS110, discuss how the above scenario should be disclosed in the
annual reports for the year ended 31 December 2021.

Answer: refer to PWC insights.

Material- disclosure needed.

You might also like