Events After the Reporting Period (IAS 10)

CR – May 2023 – L3 – Q4b – Events After the Reporting Period (IAS 10)

Advise on the correct accounting treatment and disclosures for Resource LTD’s sale.

Question

At August 31, 2016, Evolve LTD controlled a wholly owned subsidiary, Resource LTD, whose only assets were land and buildings, measured in accordance with International Financial Reporting Standards.

On August 1, 2016, Evolve LTD published a statement stating that a binding offer for the sale of Resource LTD had been made and accepted, and at that date, the sale was expected to be completed by August 31, 2016. The non-current assets of Resource LTD were measured at the lower of their carrying amount or fair value less costs to sell at August 31, 2016, based on the selling price in the binding offer. This measurement was in accordance with IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations.

However, Evolve LTD did not classify the non-current assets of Resource LTD as held for sale in the financial statements at August 31, 2016, because there were uncertainties regarding the negotiations with the buyer and a risk that the agreement would not be finalized. There was no disclosure of these uncertainties, and the original agreement was finalized on September 20, 2016.

Required:
Advise Evolve LTD on how the above transactions should be correctly dealt with in its financial statements with reference to relevant International Financial Reporting Standards. (10 Marks)

Answer

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Tags: Disclosure Requirements, Events After Reporting Period, Held for Sale, IFRS 5, Non-current Assets
Level: Level 3

Topic: Events After the Reporting Period (IAS 10)

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

Question

Maranathan Plc acquired a property for N4 million with annual depreciation on a straight-line basis at 7.5%. An impairment loss of N350,000 was recognized as of May 31, 2013, with accumulated depreciation at N1 million. The property was classified as held for sale on October 1, 2013, with fair value less costs to sell of N2.4 million. In December 2013, interim financials reported an improved fair value less costs to sell of N2.52 million. By May 31, 2014, fair value increased to N2.95 million, and the property was eventually sold on June 5, 2014, for N3 million.

Required:

a. Assess these transactions per IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. (5 Marks)
b. Evaluate the impact of events on the property over time and on reported gain per IAS 10 Events After the Reporting Period. (10 Marks)

Answer

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Tags: Depreciation, Disposal Gain, Held for Sale, Impairment Loss, Non-current Assets
Level: Level 3

Topic: Events After the Reporting Period (IAS 10)

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

Question

(b) The following events took place in Chakachaka Company Nig. Limited:

(i) Shortly after the financial year ended on June 30, 2018, but before the financial statements were authorized for issue, Chakachaka Nigeria Limited’s inventory was destroyed by a fire outbreak which resulted in a loss of N200 million.

(ii) The company’s financial year that ended June 30, 2018, shows an amount of N60 million due from one of its debtors, Mr. Onigbese. Chakachaka Nigeria Limited provided for impairment at June 30, 2018, of N15 million against the gross value of N60 million. On July 31, 2018, before the financial statements were authorized for issue, Mr. Onigbese was declared bankrupt and unable to pay the debt.

(iii) Chakachaka Nigeria Limited was sued on June 30, 2018, but the judgment was only handed down on July 21, 2018. The Company was found liable for damages and costs amounting to N31 million. On July 22, 2018, Chakachaka Nigeria Limited filed a claim with its insurers, and on July 29, 2018, it was notified that the insurer would only cover N26 million of the loss.

Required:
Prepare a brief memorandum advising the directors of Chakachaka Nigeria Limited on the accounting treatment and/or disclosure required as a result of the events in (i) to (iii) after the reporting date.

Answer

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Tags: Adjusting Events, Financial Disclosure, IAS 10, Non-adjusting Events
Level: Level 2

Topic: Events After the Reporting Period (IAS 10)
Series: NOV 2020

FR – Nov 2020 – L2 – Q3a – Events After the Reporting Period (IAS 10)

Discussion of key concepts under IAS 10 related to events after the reporting period.

Question

IAS 10 on events after the reporting period has two main objectives:

To specify when a company should adjust its financial statements for events that occur after the end of the reporting period.
To specify the disclosure that should be given about events that have occurred after the end of the reporting period but before the financial statements were authorized for issue.

Required:
Discuss the following key concepts under IAS 10:
i. Event after the reporting period
ii. Adjusting events
iii. Non-adjusting events

Answer

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Tags: Adjusting Events, Events After Reporting Period, IAS 10, Non-adjusting Events
Level: Level 2

Topic: Events After the Reporting Period (IAS 10)
Series: NOV 2020

CR – May 2023 – L3 – Q4b – Events After the Reporting Period (IAS 10)

Advise on the correct accounting treatment and disclosures for Resource LTD’s sale.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Disclosure Requirements, Events After Reporting Period, Held for Sale, IFRS 5, Non-current Assets
Level: Level 3

Topic: Events After the Reporting Period (IAS 10)

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

Question

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Disposal Gain, Held for Sale, Impairment Loss, Non-current Assets
Level: Level 3

Topic: Events After the Reporting Period (IAS 10)

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

Question

(b) The following events took place in Chakachaka Company Nig. Limited:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusting Events, Financial Disclosure, IAS 10, Non-adjusting Events
Level: Level 2

Topic: Events After the Reporting Period (IAS 10)
Series: NOV 2020

FR – Nov 2020 – L2 – Q3a – Events After the Reporting Period (IAS 10)

Discussion of key concepts under IAS 10 related to events after the reporting period.

Question

IAS 10 on events after the reporting period has two main objectives:

To specify when a company should adjust its financial statements for events that occur after the end of the reporting period.
To specify the disclosure that should be given about events that have occurred after the end of the reporting period but before the financial statements were authorized for issue.

Required:
Discuss the following key concepts under IAS 10:
i. Event after the reporting period
ii. Adjusting events
iii. Non-adjusting events

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusting Events, Events After Reporting Period, IAS 10, Non-adjusting Events
Level: Level 2

Topic: Events After the Reporting Period (IAS 10)
Series: NOV 2020

Topic: Events After the Reporting Period (IAS 10)

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CR – May 2023 – L3 – Q4b – Events After the Reporting Period (IAS 10)

Advise on the correct accounting treatment and disclosures for Resource LTD’s sale.

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

FR – Nov 2020 – L2 – Q3a – Events After the Reporting Period (IAS 10)

Discussion of key concepts under IAS 10 related to events after the reporting period.

CR – May 2023 – L3 – Q4b – Events After the Reporting Period (IAS 10)

Advise on the correct accounting treatment and disclosures for Resource LTD’s sale.

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

FR – Nov 2020 – L2 – Q3a – Events After the Reporting Period (IAS 10)

Discussion of key concepts under IAS 10 related to events after the reporting period.

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CR – May 2023 – L3 – Q4b – Events After the Reporting Period (IAS 10)

Advise on the correct accounting treatment and disclosures for Resource LTD’s sale.

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CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

You're reporting an error for "CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)"

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

You're reporting an error for "FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)"

FR – Nov 2020 – L2 – Q3a – Events After the Reporting Period (IAS 10)

Discussion of key concepts under IAS 10 related to events after the reporting period.

You're reporting an error for "FR – Nov 2020 – L2 – Q3a – Events After the Reporting Period (IAS 10)"

CR – May 2023 – L3 – Q4b – Events After the Reporting Period (IAS 10)

Advise on the correct accounting treatment and disclosures for Resource LTD’s sale.

You're reporting an error for "CR – May 2023 – L3 – Q4b – Events After the Reporting Period (IAS 10)"

CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)

Discuss IFRS 5 requirements for non-current assets held for sale and evaluate event impacts per IAS 10.

You're reporting an error for "CR – Nov 2016 – L3 – Q6 – Events After the Reporting Period (IAS 10)"

FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)

Advise on accounting treatment for events after the reporting date in a company case study.

You're reporting an error for "FR – Nov 2020 – L2 – Q3b – Events After the Reporting Period (IAS 10)"

FR – Nov 2020 – L2 – Q3a – Events After the Reporting Period (IAS 10)

Discussion of key concepts under IAS 10 related to events after the reporting period.

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