- August 15, 2022 at 3:13 pm #663130MichelleJParticipant
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Sorry i had to make another thread. I watched your lecture already but still find it little problematic.
Adjusting events are those future events which is caused by the past condition and it gives us the additional evidence that it existed at the year-end.
For eg the customer went bankrupt on 3 Feb 2017 (lecture example). Since we have aleady made an allowance for bad debt entry at the reporting date and therefore it is adjusting event.
Non-adjusting events are those future events which is not caused by the past condition so we hav no evidence that it existed at the year-end.
For eg Factory destroyed by Fire 1 Jan 2017. This event was not foreseeable and we have no evidence at reporting date that it existed so therefore it is non-adjusting event.
Please correct me If i am mistaken anywhere. Thank you.August 15, 2022 at 8:42 pm #663151John MoffatKeymaster
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We had not already made an allowance for the bad debt. However had we known that the customer would go bankrupt we would have either made an allowance or written off the debt. Therefore it is an adjusting event.
As far as the factory is concerned, even if we had known that it would burn down we would still show it in the SOFP because it existed at the reporting date. It is therefore a non-adjusting event but we would disclose it by way of note.
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