Prepare the necessary journal entries or note disclosures

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Reference no: EM132756645

Question - NBS Ltd has provided the following information concerning events occurring after the end of the reporting period. This information is to be used for the preparation of the financial statements for the year ended 30 December 2020.

(i) On 21 January 2021, the purchasing manager discovered that a batch of invoices relating to June inventory purchases had not been processed. The invoices totalled $37,650.

(ii) The company has been involved in a dispute with a government environment agency relating to the release of noxious gases from its manufacturing plant in early December 2020. An expert investigation was conducted to determine if the company was at fault. The investigator's report released on 1 March 2021 found NBS Ltd to be responsible for the release and damages amounting to $1,500,000 were payable by the company.

Assume all events and transactions are material.

Required -

(a) Classify the above events as either adjusting or non-adjusting events after the end of the reporting period. Justify your classification.

(b) Based on your answer to requirement 1, prepare the necessary journal entries or note disclosures to comply with the requirements of AASB 110.

Reference no: EM132756645

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