Events After the Reporting Period (Y7C19)

1	Which of the following material events after the reporting period and before the financial statements are approved by the directors should be adjusted for in those financial statements?
	1	A valuation of property providing evidence of impairment in value at the reporting period
	2	Sale of inventory held at the end of the reporting period for less than cost
	3	Discovery of fraud or error affecting the financial statements
	4	The insolvency of a customer with a debt owing at the end of the reporting period which is still outstanding
	A	All of them
	B	1, 2 and 4 only
	C	3 and 4 only
	D	1, 2 and 3 only
2	The draft financial statements of a limited liability company are under consideration. The accounting treatment of the following material events after the reporting period needs to be determined
	1	The bankruptcy of a major customer, with a substantial debt outstanding at the end of the reporting period
	2	A fire destroying some of the company's inventory (the company's going concern status is not affected)
	3	An issue of shares to finance expansion
	4	Sale for less than cost of some inventory held at the end of the reporting period
	According to IAS 10 Events after the reporting period, which of the above events require an adjustment to the figures in the draft financial statements?
	A	1 and 4 only
	B	1, 2 and 3 only
	C	2 and 3 only
	D	2 and 4 only
3	In finalising the financial statements of a company for the year ended 30 June 20X4, which of the following material matters should be adjusted for?
	1	A customer who owed $180,000 at the end of the reporting period went bankrupt in July 20X4.
	2	The sale in August 20X4 for $400,000 of some inventory items valued in the statement of financial position at $500,000.
	3	A factory with a value of $3,000,000 was seriously damaged by a fire in July 20X4. The factory was back in production by August 20X4 but its value was reduced to $2,000,000.
	4	The company issued 1,000,000 ordinary shares in August 20X4.
	A	All four items
	B	1 and 2
	C	1 and 4 only
	D	2 and 3 only
4	IAS 10 Events after the reporting period regulates the extent to which events after the reporting period should be reflected in financial statements. Which one of the following lists of such events consists only of items that, according to IAS 10, should normally be classified as non-adjusting?
	A	Insolvency of an account receivable which was outstanding at the end of the reporting period, issue of shares or loan notes, an acquisition of another company
	B	Issue of shares or loan notes, changes in foreign exchange rates, major purchases of non-current assets
	C	An acquisition of another company, destruction of a major non-current asset by fire, discovery of fraud or  error which shows that the financial statements were incorrect
	D	Sale of inventory which gives evidence about its value at the end of the reporting period, issue of shares or loan notes, destruction of a major non-current asset by fire
5	Which of the following events occurring after the reporting period are classified as adjusting, if material?
	1	The sale of inventories valued at cost at the end of the reporting period for a figure in excess of cost
	2	A valuation of land and buildings providing evidence of an impairment in value at the year end
	3	The issue of shares and loan notes
	4	The insolvency of a customer with a balance outstanding at the year end
	A	1 and 3
	B	2 and 4
	C	2 and 3
	D	1 and 4
6	The financial statements of Overexposure Co for the year ended 31 December 20X1 are to be approved on 31 March 20X2. Before they are approved, the following events take place.
	1	On 14 February 20X2 the directors took the strategic decision to sell their investment in Quebec Co despite the fact that this investment generated material revenues.
	2	On 15 March 20X2, a fire occurred in the eastern branch factory which destroyed a material amount of inventory. It is estimated that it will cost $505,000 to repair the significant damage done to the factory.
	3	On 17 March 20X2, a customer of Overexposure Co went into liquidation. Overexposure has been advised that it is unlikely to receive payment for any of the outstanding balances owed by the customer at the year end.
	How should these events reflected in the financial statements at 31 December 20X1?
		Adjust	Disclose	Do nothing
	A	3	2, 3	1
	B	2, 3	1	-
	C	3	1, 2	-
	D	2	3, 1	-
7	Which of the following events between the reporting date and the date the financial statements are authorised for issue must be adjusted in the financial statements?
	1	Declaration of equity dividends
	2	Decline in market value of investments
	3	The announcement of changes in tax rates
	4	The announcement of a major restructuring
	A	1 only
	B	2 and 4
	C	3 only
	D	None of them
8	Which of the following is the correct definition of an adjusting event after the reporting period?
	A	An event that occurs between the reporting date and the date on which the financial statements are authorised for issue that provides further evidence of conditions that existed at the reporting date
	B	An event that occurs between the reporting date and the date on which the financial statements are authorised for issue that provides evidence of conditions that arose subsequent to the reporting date
	C	An event that occurs after the date the financial statements are authorised for issue that provides further evidence of conditions that existed at the reporting date
	D	An event that occurs after the date the financial statements are authorised for issue that provides evidence of conditions that arose subsequent to the reporting date
9	If a material event occurs after the reporting date but before the financial statements are authorised for issue outside the organisation, and this event does NOT require adjustment, what information should be disclosed in the financial statements?
	A	The nature of the event and an estimate of the financial effect (or a statement that such an estimate cannot be made)
	B	The nature of the event only
	C	An estimate of the financial effect (or a statement that such an estimate cannot be made) only
	D	No disclosure required