Reference no: EM133014422

Question - Angela audited the accounts of Carey Ltd, an engineering firm listed on the Australian Stock Exchange, for the year ended 30 June 20X9. Angela is aware that the following events that took place after 30 June (but before she had issued her report dated 19 September 20X9) may affect the company's financial statements.

a) On 25 July 20X9, Carey settled and paid a claim involving prior employees alleging sexual discrimination as a result of promotions announced at the Christmas party in 20X8. Five women who had been overlooked for management promotions undertook legal action in March 20X9.

b) On 1 August 20X9, Carey Ltd made an announcement to the Singapore Stock Exchange of its intention to take over a private engineering partnership. This would increase sales revenue of Carey Ltd by 15%. It was to be funded by a 1:10 rights issue.

c) On 12 August 20X9, a fire damaged the head office of Carey. The buildings, fixtures and fittings were only partly insured.

d) At its 5 September 20X9 meeting, Carey's board of directors voted to double the advertising budget for the coming year and authorised a change in advertising agencies.

Note that each event is independent and is to be considered separately.

What is the required treatment of each event in the financial statements? Justify your decisions.