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1.”Evidence of a permanent diminution in property value prior to the year end”
Could you explain what condition existed at the reporting period so that when the above happen will occur, an adjustment will occur.”
The condition is that the property was owned at the reporting date and the information received after the reporting date shows that its value was lower than its carrying value.
Thank you for the answer.
So let’s say we have an inventory and it got destroyed by fire after the reporting period.
So this will be an adjusting event due to the fact the property was owned at the reporting date? Am I correct?
No, because the fire did not exist at the reporting date, so the inventory was fine and no adjustment is required. If it is a material impact on the inventory after the reporting date then it will be disclosed in the notes to the account.