Adjusting and non-adjusting events

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Reference no: EM132892241

Events after the reporting period

In relation to the operations of Cat Ltd. The following events took place after the end of the reporting period, 30 June 2019, but before the date the accounts were authorised, 15 Sep- tember 2019.

(a) On 17 July 2019, Cat Ltd's main fishing fleet was sunk during a freak storm. Insurance will cover the replacement of the vessels but lost sales representing $550 000 in profits are not covered.

(b) On 19 July 2019 Cat Ltd took delivery of a fishing net for its prawn trawler. The net was purchased from a UK manufacturer on delivered duty paid shipping terms and was in transit at the end of the reporting period. An inspection of the net revealed significant structural flaws and the net was returned to the supplier on 28 July 2019. Cat Ltd is to re- ceive a full refund of the $650 000 purchase price which had been paid in advance on 29 June 2019.

(c) On 29 August 2019 a lawsuit was lodged against the company by the families of crew mem- bers drowned in the 17 July storm, alleging negligence, and claiming $4 million in dam- ages. No date has as yet been set for the court hearing.

(d) On 1 September 2019 the directors resolved to issue to the public 10 000 5% debentures of $10 each, payable $5 on application and $5 on allotment.

Required

Classify the above events into adjusting and non-adjusting events after the end of the reporting period, justifying your choice.

Reference no: EM132892241

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