- Events after the end of reporting period are favorable or unfavorable events that occur between
a. The end of the reporting period and the date of the next annual financial statements.
b. The end of the reporting period and the date of the next interim or annual financial statements.
c. The end of the reporting period and the date when the financial statements are authorized for issue.
d. The end of reporting period and the date of the next interim financial statements.
c. The end of the reporting period and the date when the financial statements are authorized for issue.
- Adjusting events are events that
a. Provide evidence of conditions that existed at the end of the reporting period.
b. Are favorable and indicative of conditions that arose after the end of the reporting period.
c. Are unfavorable and indicative of conditions that arose after the end of the reporting period.
d. Provide of conditions that existed after the date the financial statements were authorized for issue.
a. Provide evidence of conditions that existed at the end of the reporting period.
- The financial statements are authorized for issue
a. When the board of directors reviews the financial statements and authorizes them for issue.
b. When the financial statements are made available to shareholders.
c. When the shareholders approve the financial statements at their annual meeting.
d. When the approved financial statements are filed with a regulatory body.
a. When the board of directors reviews the financial statements and authorizes them for issue.
- Which statement is true about nonadjusting events?
a. The entity shall disclose the nature and effect of the event in the financial statements.
b. The entity shall adjust the related amount in the financial statements.
c. The entity shall disclose the nature and effect of the event and adjust the related amount.
d. The entity shall disclose nothing.
a. The entity shall disclose the nature and effect of the event in the financial statements.
- Non Adjusting events include all, except
a. A major business combination after reporting period
b. Announcing a plan to discontinue an operation
c. Expropriation of major asset after the reporting period
d. Destruction of a major production plant by a fire before the end of the reporting period
d. Destruction of a major production plant by a fire before the end of the reporting period
- Which event after the reporting period would require adjustment?
a. Loss of plant as a result of fire
b. Change in the market price of investment
c. Loss on inventory resulting from flood loss
d. Loss on a lawsuit the outcome of which was deemed uncertain at year-end
d. Loss on a lawsuit the outcome of which was deemed uncertain at year-end
- Events that occur after the current year-end but before the financial statements are issued and affect the realizability of accounts receivable should be
a. Discussed in the management annual report.
b. Disclosed in the notes to financial statements.
c. Used to record an adjustment to bad debt expense.
d. An adjustment directly to retained earnings.
c. Used to record an adjustment to bad debt expense.
- Non Adjusting events include all, except
a. The entity announced a discontinued operation.
b. An agreement to purchase the leased building.
c. Distruction of a major production plant by fire.
d. A mistake in the calculation of allowance for doubtful accounts.
d. A mistake in the calculation of allowance for doubtful accounts.
- Which event after the end of reporting period would generally require disclosure?
a. Retirement of key management personnel
b. Settlement of litigation when the event that gave rise to the litigation occurred in a prior period
c. Strike of employees
d. Issue of a large amount of ordinary shares
d. Issue of a large amount of ordinary shares
- At the end of the current reporting period, an entity carried a receivable from a major customer who declared bankruptcy after the end of reporting period and before the issuance of financial statements. What should be reported at the current year-end?
a. Disclose the fact that the customer has declared bankruptcy.
b. Make a provision for the event after reporting period in the financial statements. c. Ignore the event and wait for the outcome of the bankruptcy.
d. Reverse the sale pertaining to the receivable in the comparative statement for the prior period.
b. Make a provision for the event after reporting period in the financial statements.
- An entity decided to build and operate an amusement park next year. The entity applied for a letter of guarantee which was issued before the issuance of the financial statements of the current year. What is the adjustment required at the current year-end?
a. Book a long-term payable for the amount of guarantee
b. Disclose the guarantee as a contingent liability
c. Increase the contingency reserve
d. Do nothing
d. Do nothing
- An entity built a new factory building during the current year. Subsequent to the current year-end and before issuance of financial statements, the building was destroyed by fire and the claim against the insurance entity proved futile because the cause of the fire was negligence on the part of the caretaker of the building. What should be reported at the current year-end?
a. Write off the carrying amount of the building
b. Make a provision for one-half of the carrying amount of the building
c. Make a provision for three-fourths of the carrying amount of the building
d. Disclose the non adjusting event in the notes to financial statements
d. Disclose the non adjusting event in the notes to financial statements
- An entity deals extensively with foreign currency transactions. Subsequent to the end of reporting period and before the date of authorization of the issuance of the financial statements, there were abnormal fluctuations in foreign currency rate. What should be reported at the current year-end?
a. Adjust the foreign exchange year-end balances to reflect the abnormal adverse fluctuations
b. Adjust the foreign exchange year-end balances to reflect all abnormal fluctuations and not just adverse movements
c. Disclose the post-reporting period event
d. Ignore the post-reporting period event
c. Disclose the post-reporting period event
- Which statement is true in relation to events after the reporting period?
a. Notes to the financial statements should give details of material adjusting events included in those financial statements.
b. Notes to the financial statements should give details of material non adjusting events which could influence the economic decisions of primary users.
c. A decline in the fair value of trading investments would normally be classified as an adjusting event.
d. The settlement of a long-running court case would normally be classified as a non adjusting event.
b. Notes to the financial statements should give details of material non adjusting events which could influence the economic decisions of primary users.
