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hi Sir ,
Which of the following events occurring after the reporting period are classified as adjusting, if material?
1 The sale of inventories valued at cost at the end of the reporting period for a figure in excess of
cost
2 A valuation of land and buildings providing evidence of an impairment in value at the year end
3 The issue of shares and loan notes
4 The insolvency of a customer with a balance outstanding at the year end
A 1 and 3
B 2 and 4
C 2 and 3
D 1 and 4Ans is B . I dun understand why 1 is not an adjusting event ?it is because sales of inventory figure is higher thn cost so we no need to do adjustment ?and because inventory is base on lower cost or NRV . Am i rite ? thank You
You are right.
It would only need an adjustment if they were sold for a figure less than cost.
ok .thank you Sir 🙂
How about Inventory destroyed by flood two days before the reporting date? is Adjusting or non- adjusting ?
confusing with – loss of non current assets due to catastrophe is – non adjusting
– inventory destroyed by flood two days before the reporting date?hi sir ,
Inventory destroyed by flood two days before the reporting date ? adjusting ??
why ?? confusing …Adjusting and non-adjusting events only relate to events occurring after the reporting date.
If the inventory has been destroyed before the reporting date, then it will already be valued correctly in the statements (i.e. at zero if it was all destroyed!).
Mornign Sir ,
How about Inventory destroyed by flood after the reporting date . Non-adjusting ?
can u help me with inventory sold at lower than cost. the sales happened after year end . so why its an adjusting event /
It is adjusting because had we known at the end of the year that it was going to be sold for less than cost then we would have valued it at the net realisable value (as per IAS 2).
Have you watched my free lectures on this?
The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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