Week 7: Events After The Reporting Period

Question 1

Adjusting Events

Answer 1

Events which provide evidence of conditions that existed at the balance sheet date

Question 2

Non-adjusting events

Answer 2

Events that are indicative of conditions that arose after the balance sheet date

Question 3

Examples of Adjusting Events

Answer 3

1) Sale of Stock/Inventory after balance sheet date showing that estimate of NRV was incorrect
2) A trade debtor going into liquidation
3) A subsequent valuation of property which indicates a permanent fall in value of asset

Question 4

What does NRV stand for

Answer 4

Net realisable value

Question 5

Examples of Non-Adjusting Events

Answer 5

1) Issue of shares
2) Loss of non-current asset due to catastrophe
3) Changes in foreign exchange rate