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Brakes had a reporting date of 30 September 20X8. The financial statements for that year were approved on 14 December 20X8 and issued on 17 January 20X9. Details of several events which occurred after the reporting date of 30 September 20X8 are as follows:
1 A fire destroyed inventory which cost $4,200 on 3 October 20X8.2 A credit customer with an outstanding balance at the year-end was declared bankrupt on 12 December 20X8.
3 An ordinary dividend of 6c per share was declared on 1 December 20X8
4 An inventory valued at a cost of $800 at the yearend was sold for $650 on 11 December 20X9
Which of the item above are non-adjusting events?
As per Kaplans answer only 3 is a non-adjusting event
However, the fire destroyed items after the reporting period, I understand that this is before the approved date. But your notes mention a fire as an example of a non adjusting event after the reporting date.
I’m confused, please could you advise
My example of the fire was relating to the factory.
The reason that the inventory here is an adjusting event is because of IAS 2. The inventory is valued at the lower of cost and NRV.
(I trust that you are not using the notes without watching the lectures, because that would be pointless. They are lecture notes and it is in the lectures that I explain and expand on the notes. If you are not watching the lectures for any reason then it is essential that you buy a Study Text from one of the ACCA Approved Publishers and study from there.)
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