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Events After Reporting Period Sample

This document provides 17 examples of events occurring after the reporting period for the purposes of assessing whether adjustments or disclosures are required in authorized financial statements. The examples cover a range of topics including warranty obligations, legal claims, foreign exchange losses, asset impairments, dividends, and discontinued operations.

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156 views3 pages

Events After Reporting Period Sample

This document provides 17 examples of events occurring after the reporting period for the purposes of assessing whether adjustments or disclosures are required in authorized financial statements. The examples cover a range of topics including warranty obligations, legal claims, foreign exchange losses, asset impairments, dividends, and discontinued operations.

Uploaded by

carl fuerzas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Exercises for Events after the Reporting Period

Ex 1 An entity gives warranties at the time of sale to purchasers of its products. On 31 December 20X5
an entity assessed its warranty obligation to be CU100,000(1). Immediately before the 31 December
20X5 annual financial statements were authorized for issue, the entity discovered a latent defect in one
of its lines of products (ie a defect that was not discoverable by reasonable or customary inspection). As
a result of the discovery, the entity reassessed its estimate of its warranty obligation at 31 December
20X5 at CU150,000.

Ex 2 On 1 March 2021 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue.
On 1 February 2021 a competitor agreed to settle a claim by the entity for breach of one of its patents.
The entity opened the case against the competitor in 2020. However, the competitor had disputed the
entity’s case.

Ex 3 On 1 March 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. At 31 December 20X0 the entity had significant unhedged foreign currency
exposures. By 1 March 20X1 a significant loss had been incurred on these exposures because of a
material weakening of the entity’s functional currency against the foreign currencies to which it is
exposed.

Ex 4 The facts are the same as in example 2, with the following change. Instead of the competitor
agreeing to settle on 1 February 20X1, on that date a jury found the competitor liable for the amount of
the entity’s claim. However, the competitor has a right to appeal the jury decision to a higher court and
has indicated its intention to do so.

Ex 5 The facts are the same as in example 1. However, the latent defect was discovered on 31 March
20X6, after the 31 December 20X5 annual financial statements were authorised for issue. In April 20X6
the entity paid CU150,000 to transfer the obligation to an independent third party.

Ex 6 On 1 March 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. On 1 February 20X1 a competitor settled a claim by the entity for breach of one of
its patents by paying the entity CU600,000. The entity opened a case against a competitor in 20X0.
However, until 1 February 20X1 the competitor disputed the entity’s case.

Ex 7 An entity gives warranties at the time of sale to purchasers of its products. On 31 December 20X5
an entity assessed its warranty obligation as CU100,000. Immediately before the 31 December 20X5
annual financial statements were authorised for issue, the entity discovered a latent defect in one of its
lines of products (ie a defect that was not discoverable by reasonable or customary inspection). As a
result of the discovery, the entity reassessed its estimate of its warranty obligation at 31 December 20X5
at CU150,000.
Ex 8 On 28 February 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. The entity sells some products on credit to a customer before 31 December 20X0.
At 31 December 20X0 the entity’s management had no doubt about the customer’s ability to pay the
outstanding trade receivable of CU200,000. However, in February 20X1, during the process of finalising
the financial statements, the entity is informed that the customer is going into liquidation because it has
significant debt, has virtually no cash inflows, and its accounting records are poorly maintained. Because
of this, the trade receivables are deemed worthless.

Ex 9 In March 20X5 the entity discovers that an error was made in the inventory reported in its
statement of financial position at 31 December 20X2, resulting in an overstatement of income for that
year. No error was made in the inventory that was reported for 31 December 20X3. Therefore the effect
of the error on profit for 20X2 was ‘reversed‘ in measuring profit for 20X3.

Ex 10 On 1 March 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. At 31 December 20X0 the entity had significant unhedged foreign currency
exposures. By 1 March 20X1 a significant loss had been incurred on these exposures because of a
material weakening of the entity’s functional currency against the foreign currencies to which it is
exposed.

Ex 11 On 28 February 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. On 20 February 20X1 a fire destroyed one of the entity’s paper manufacturing
plants which had a carrying amount of CU2,000,000 at 31 December 20X0. The entity does not have
insurance against fire damage. The entity remains a going concern.

Ex 12 On 28 February 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. At 31 December 20X0 the fair value of the entity’s investment in the ordinary
shares of a publicly traded entity accounted for at fair value through profit or loss in accordance with
paragraph 11.14(c)(i) of Section 11 Basic Financial Instruments was CU20,000. On 28 February 20X1 the
fair value of the shares was CU25,000.

Ex 13 On 1 March 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. On 28 February 20X1 the entity declared a final dividend of CU100,000 in respect of
profits earned in the year ended 31 December 20X0.

Ex 14 On 1 March 20X1 an entity’s financial statements for the year ended 31 December 20X0 were
authorised for issue. On 28 February 20X1 the entity paid a final dividend of CU100,000 to its
shareholders in respect of profits earned in the year ended 31 December 20X0. The entity declared the
dividend on 31 December 20X0.
Ex 16 An entity’s financial statements for the year ended 31 December 20X0 were authorised for issue
on 28 February 20X1. On 20 February 20X1 a fire destroyed one of the entity’s paper manufacturing
plants, which had a carrying amount of CU2,000,000 in the entity’s statement of financial position at 31
December 20X0. The entity does not have insurance against fire damage. The destroyed plant has no
value. It will be replaced at an estimated cost of CU3,000,000

Ex 17 On 15 May 20X1 an entity’s financial statements for the year ended 31 March 20X1 were
authorised for issue. The entity has three major product lines: A, B and C. On 1 May 20X1 the entity
announced that it intends closing its Product A operations. The product A operations did not meet the
criteria to be classified as held for sale at 31 March 20X1.

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