- 4 Marks
FR – Nov 2016 – L2 – Q2d – Financial Statement Analysis
Discuss the effects of two events on the financial statements in accordance with IAS 10 Events after the Reporting Period.
Question
Suame Ltd is a listed telecommunication company which prepares its financial statements for the year ended 31 October 2015 in accordance with IFRS. The financial statements are due to be authorised for issue on 15 January 2016.
- i) Suame Ltd holds an investment in the shares of a listed company, Asafo Ltd. During November 2015 there was a material fall in the value of Asafo Ltd’s shares. Analysts attribute the fall in value principally to a fraud dating back to December 2014 that was discovered by Asafo Ltd’s management and announced publicly in November 2015.
- ii) In December 2015, the directors of Suame Ltd publicly announced a plan to reduce the workforce by 10% as a result of worsening economic conditions.
Required:
Discuss the effects of each of the above items on the financial statements of Suame Ltd for the year ended 31 October 2015 in accordance with IAS 10 Events after the Reporting Period.
Find Related Questions by Tags, levels, etc.
- Tags: Adjusting Events, Fraud, IAS 10, Non-adjusting Events, Post-reporting events, Restructuring
- Level: Level 2
- Topic: Financial Statement Analysis
- Series: NOV 2016
Report an error