Reference no: EM133308205
Assume that you are the engagement partner for the financial report audit of APC Ltd for the year ended 30 June 2021. The following material events or transactions have come to your attention before you are scheduled to issue your report on 31 August 2021:
On 15 July 2021, the APC Ltd settled and paid a personal injury claim of a former employee as a result of an accident that occurred in March 2021. The company has not previously recorded a liability for the claim.
On 18 July 2021, APC Ltd agreed to purchase for cash the outstanding shares of Renata Pharmaceuticals Ltd. This acquisition is likely to double the sales volume of APC Ltd.
On 19 July 2021, the directors became aware of broken glass found in their pre-packaged sandpits. This product had only been on sale for two weeks and had been purchased directly from the manufacturer, Sandpit Ltd, an unrelated company in Hongkong, one week prior to being introduced to the public.
On 3 August 2021, a plant owned by APC Ltd was damaged in a flood, resulting in an uninsured loss of inventory.
Do you think any treatment required in the financial report for each of the above events or transactions for the year ended 30 June 2021? Justify your arguments with both theoretical understanding and practical applications. [You need to refer to the types of events subsequent to the balance date.