Reference no: EM132584852

A) Munir Trading Company has faced the law suit for damages claim for Rs. 1 million by another company. Just before the financial year ending on 30th June, it was believed that the decision of the case is remote and uncertain as well. Therefore the provision for damages claim was not created by the Company. It was the day of 12th august a month and a half after the ending of the financial year when the court give the decision in favour of other party.

Problem 1: Identify that:

1) Under what condition the above event can be considered as adjusting and non- adjusting event? Determine its treatment as per IAS 10 in both cases. SEMESTER SPRING 2020

B) Asghar Trading Company has shown investments of Rs. 5 million in financial statement on 30th June. Due to the downfall in the stock market the value of investments reduced to Rs. 4.9 million by 17th august of the same year before financial statements are authorized for issue. Determine its treatment as per IAS 10.

C) ABC Company Limited involved in trading business. At the end of the year the book value of stock was Rs. 2.5 million whereas net realizable value was Rs. 2.45 million. The stock was sold at Rs. 2.30 million after the balance sheet date but before the 10th of February the time of financial statements are authorized for issue. Identify that at what price the stock was reported in balance sheet on 31st December?Also identify and explain whether it is an adjusting event or non-adjusting event?

D) XYZ limited has declared 10% dividend Rs. 2 million to its shareholder on 27th of December 2018, before the ending of financial year. The dividend not yet paid or recorded till the financial statements are authorized for issue. Determine the treatment of this dividend announcement as per IAS 10.

Problem 2:

Under IAS 10, why disclosure for a non-adjusted event is important? How the disclosure for a non-adjusted event is made by an entity in its financial statements?