Unit 6: Events After the Reporting Period Flashcards
(T/F). PAS 10 defines EARP as those events that occur between the end of reporting period and the date on which the FS are authorized for issue.
True.
Events after the reporting period are also known as ___.
Subsequent events.
(T/F). It’s appropriate to adjust FS for all events that offer clarity concerning conditions that existed at the end of the period and that occur prior to FS authorization.
True.
(T/F). An entity recognizes events after the reporting period that relate to conditions that only arose afterwards.
False. An entity does not recognize events after the reporting period that relate to conditions that only arose afterwards.
_____ events are those that provide evidence of conditions that exist at the end of the reporting period.
Adjusting events.
(T/F). An entity is sometimes required to submit its FS to the shareholders for approval after these have been issued.
In such cases, the FS are authorized for issue on the date of issue by the board of directors and NOT on the date when shareholders approve of the FS.
True.
The sale of inventories after the reporting period, the determination of the cost of purchased assets (after the period), and the determination of the proceeds from assets sold (before the end of the reporting period) are all examples of ___ events.
Adjusting events.
(T/F). PAS 10 provides that an entity need not disclose the date when the FS are authorized for issue and who gave the information.
False. An entity shall disclose.
Adjusting/Nonadjusting:
Business combination after the reporting period.
Nonadjusting.
(T/F). The entity is required only to disclose nonadjusting events, even insignificant ones.
False. Only significant adjusting events are needed to be disclosed.
Adjusting/Nonadjusting:
The determination after RP of the profit sharing or bonus payent if the entity has the present obligation at the end of reporting period to make such payment.
Adjusting.
Adjusting/Nonadjusting:
Bankruptcy of a customer which occurs after the end of the reporting period.
Adjusting.
Adjusting/Nonadjusting:
Major purchase and disposal of asset or expropriation of major asset by government.
Nonadjusting.
Adjusting/Nonadjusting:
Major ordinary share transactions and potential ordinary share transactions after the reporting period (e.g., the declaration of dividends).
Nonadjusting.
Adjusting/Nonadjusting:
Change in tax rate enacted or announced after the end of reporting period that has a significant effect on current and deferred tax asset and liability.
Nonadjusting.
Adjusting/Nonadjusting:
Abnormally large changes after the RP in asset prices or foreign exchange rates.
Nonadjusting.
Adjusting/Nonadjusting:
At year-end, a firm has already assessed its warranty obligation to be PHP100,000. Immediately before the 2017 FS were authorized, the entity discovered a latent defect in one of its lines of products (i.e., a defect that was not discoverable by reasonable or customary inspection).
Adjusting.
Adjusting/Nonadjusting:
Major purchase or disposal of assets, classification of assets as eld for sale or expropriation of major assets by government.
Nonadjusting.
What disclosures must an entity make for each material category of non-adjusting event after the reporting period?
The entity must disclose:
a) the nature of the event; and
b) an estimate of its financial effect, or a statement that such an estimate cannot be made.
(T/F). An entity shall not prepare its financial statements on a going-concern basis if management determines after the RP that it either intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to do so.
True.
