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D Ltd is a building construction company based in South Australia with an estimated profit of $1.1million for the year ended 30 June 2020. The financial statements for the year are currently being prepared and will be authorised for issue by the board of directors at the end of August 2020.
Required:
Problem i) Determine whether this event is an adjusting event or a non-adjusting event and explain how it should be accounted for in the financial statements of D Ltd for the year ended 30 June 2020. Support your answer with adequate and appropriate justification and reference to relevant Australian Accounting Standards.
Problem ii) Specify any journal entry(ies) and/or disclosures that may be required. Narrations are not required.
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