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Hi.
an example of an adjusting event is a court case settlement after reporting date.
Just to increase my understanding, if there was a court case in progress, there must have been a provision made for it already. is that correct?
lets assume a provision was made for 100k.
and the case is settled at 70k.
so, once it is settled, the adjusting entry wd be:
Dr Provision 30k
Cr Expense 30kwd this be the actual adjusting entry?
Yes it would.
Provided obviously that the settlement was made before the accounts were finalised, then the original provision would be ‘corrected’ by making the entry you have written, as at the end of the accounting period in question.
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