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There is a point in adjusting events that..”allowance for damaged inventory and doubtful debts are adjusting events”
And there is also a point in non adjusting events that” losses of non current assets and inventory as a result of fire”. What are the differemce in these two points in relation to inventory..are they same or different ?See Chapter 26 – all events after the reporting period occur after the year end date – but only those that provide evidence of CONDITIONS that EXISTED at the y/e are adjusting.
At the y/e, before the fire/flood/explosion/tsunami, etc – the assets existed – they were in the condition that is reflected by their carrying amount as determined at the y/e. That hasn’t changed – the fire/flood/explosion/tsunami is a non-adjusting event.
BUT – sell your goods after the y/e in a sale for less than cost – and you have evidence that the goods should have been written down to NRV at the y/e – i.e. an ADJUSTING event.
Perhaps less obviously, but similarly trade receivable – that customers can’t pay because they’ve gone bankrupt/gone into liquidation/administation/receivership, etc shortly after the y/e is evidence of their insolvency at the y/e date (they didn’t go from solvent to “bust” over night) – i.e. an ADJUSTING event.
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