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Hello please can someone help with this waxwork example in the kaplan, thanks

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Hello please can someone help with this waxwork example in the kaplan, thanks

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  • November 29, 2018 at 3:51 pm #486461
    asantewah
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    WAXWORK (a) The objective of IAS 10 Events after the Reporting Period is to prescribe the treatment of events that occur after an entity’s reporting period has ended. Required: Define the period to which IAS 10 relates and distinguish between adjusting and non-adjusting events. (5 marks) (b) Waxwork’s current year end is 31 March 2009. Its financial statements were authorised for issue by its directors on 6 May 2009 and the AGM (annual general meeting) will be held on 3 June 2009. The following matters have been brought to your attention: (i) On 12 April 2009 a fire completely destroyed the company’s largest warehouse and the inventory it contained. The carrying amounts of the warehouse and the inventory were $10 million and $6 million respectively. It appears that the company has not updated the value of its insurance cover and only expects to be able to recover a maximum of $9 million from its insurers. Waxwork’s trading operations have been severely disrupted since the fire and it expects large trading losses for some time to come. (ii) A single class of inventory held at another warehouse was valued at its cost of $460,000 at 31 March 2009. In April 2009 70% of this inventory was sold for $280,000 on which Waxworks’ sales staff earned a commission of 15% of the selling price. (iii) On 18 May 2009 the government announced tax changes which have the effect of increasing Waxwork’s deferred tax liability by $650,000 as at 31 March 2009.

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