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Events after the reporting period

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Events after the reporting period

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
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  • August 7, 2016 at 2:55 am #331754
    Abror
    Member
    • Topics: 75
    • Replies: 38
    • ☆☆

    Good evening Mr John..

    The question is you gave an example on non-adjusting such as building destroyed by fire which has cost $1m causing Insurance pay for 500.000…What about the other sum?
    So did you mean now the same building cost 500.000?
    I am confused a little bit…It might be adjusted because it is losing its half of the value?

    Or you mean , the damage only cost 500.000

    Thank you..

    August 7, 2016 at 8:48 am #331789
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    How much the damage cost, and how much it originally cost, is of no relevance as all.

    A note is required stating what has happened and the financial consequences – so we would say that it had been destroyed, we would state what its net book value had been, and we would state the amount of insurance that we expect to receive.

    August 7, 2016 at 9:08 pm #331870
    Abror
    Member
    • Topics: 75
    • Replies: 38
    • ☆☆

    Alright..But the question is why?
    Why dont we just adjust it like we do for inventory?

    Thanks Mr John..I really appreciate it..

    August 8, 2016 at 8:55 am #331922
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    Because that the date of the Statement of financial position the factory existed and was valued as it should have been.

    With inventory we have the rule that it should be valued at the lower of cost and NRV – we do not have that rule for non-current assets.

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