Reference no: EM133188916

Question - MQE Ltd's accounts receivable balance as at 30 June 2022 was recorded at $3.487 million. In the prior financial year the company wrote off a bad debt totaling $550,000 from an overseas customer whose business suffered significantly due to COVID-19 issues. At the time this payment was not likely to be recoverable and a provision was provided in the accounts for this amount. On the 1 July 2022, the customer has notified MQE Ltd to let them know that they are now in a position to settle their debt and will provide payment in full on the 31 July 2022.

Required -

a) Identify the nature of the transaction/event.

b) Provide and discuss the applicable accounting standard the transaction/event relates and why.

c) Is there a requirement for the transaction or event to be disclosed in the annual report? If so, provide a suitable disclosure note to the accounts that the company will use in their upcoming annual report or alternatively where it should appear in the financial statements. (Ensure you include amounts as well as any workings where applicable).

d) Is there a requirement for an adjustment to be made to the financial statements? If so, what would this adjustment amount be to the accounts? Provide sufficient workings (calculations) where required.