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Hello Sir, for Specimen Exam 2 Q1(b) “Hill”
Why the breach of the covenant at the y/e and received of bank confirmation after the reporting date is not an adjusting event? Does it not provide evidence that the loan not repayable immediately at the reporting date?
Thank you.
One of those questions that makes our brain go round in circles!
Perhaps the justification is that, at the year end, the bank had not made its mind up. But in my mind if it feels inconsistent with, say, an unresolved legal claim.
As always, it’s knowledge that counts, so, as long as you have put down the definition of adjusting/non-adjusting, you will be fine.
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