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Without wasting much of time. I just want to confirm that why Second (2) statement is considered to be a non-adjusting material event. I have studied that it is event adjusted in upcoming financial statements next year it would be left for now.
Question
Which of the following material events that took place after the reporting date, but before the financial statements were approved, are non-adjusting when applying IAS 10 Events After the Reporting Period?(i) Inventory held at the reporting date was sold for less than cost.
(ii) Capital raised by issuing shares at a premium.
(iii) A company reorganisation which results in discontinuing a line of activity producing 25% of its profit.
(iv) The settlement of a claim for compensation from a former employee wrongly dismissed just before the reporting date.
A (i) and (ii)
B (i), (iii) and (iv)
C (i) and (iii) only
D (ii) and (iii)Answer D.
You have answered the question yourself in your second sentence!
The accounting standard is not concerned with what will happen next year. The question is always as to whether the current financial statements will be adjusted or not.
Here the shares are issued after the reporting date and therefore the statements will not be adjusted.
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