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Hi Mike,
I have a question asking what the accounting treatment would be for the following senario.
On 1st April Glaze made a largr sale of goods to a new customer in extended credit terms. Customer agreed pay back 3m on 31st march 2016. Market rates of interest are 10%.
As at 31st march 2015 there was no inidication that the customer was experiencing financial problems. However during may 2015 there were unexpected movements in the currency market which placed a large strain on customers cash balance. In june 2015 the customer told glaze they will now pay pay 1m on the original due date and a further 2.2m on 31st march 2017. Glaze therefore proposes to impair this receivable in the accounts for the year ended 31st march 2015.
They would like advice on how to account for this receivable.
As the information was only conveyed to glaze in june 2015 so are we looking at events after the reporting period (non adjusting or adjusting)? If not please can you advise which standard i need to refer to?
Thank you!
We are looking at “Events after the reporting date” but this is an adjusting event (maybe contrary to what you expected)
An adjuster is one that relates to a condition or situation that existed at the year end or it fixes with greater certainty an amount or estimate as at the year end
And this one does!
So, as at the year end, revalue the receivable and write off the difference
Is that ok?
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