[zumrudaliyeva]

It is a test your understanding question from Kaplan’s Financial Reporting study book.

[zumrudaliyeva]

Thank you so much!

[zumrudaliyeva]

The answer says “The fire is a non-adjusting event because it does not change any of the figures in the accounts at the year end. If material, which is likely, it should be disclosed in the notes to the financial statements.”

I thought it was adjusting event because it might affect going concern as all inventory had been destroyed by fire.

[zumrudaliyeva]

Thank you so much, sir! I’ve started to watch all of your videos.

[zumrudaliyeva]

Thank you sir. One thing I did not fully comprehend is why in this question settlement discount is extracted from payables? After all, payables is credited when created and debited when paid with whole amount without taking into account the settlement discount.

Question from BPP 15.15:
The balance on Jude Co’s trade payables account is $31554. The accountant at Jude Co has discovered that she has not recorded:
• A settlement discount of $53 received from a supplier; and
• A supplier’s invoice for $622. What amount should be reported for payables on Jude Co’s statement of financial position?

So, in this question I added $622 to $31554, but did not use $53.

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