Question

The financial statements of BARYL BHD for the financial year ended on 31 December 2019 has...

The financial statements of BARYL BHD for the financial year ended on 31 December 2019 has been authorised for issue to the board of directors on 15 February 2020. The followings are events occurred after the reporting period.

(A) A decline of fair value in quoted shares on 12 February 2020 from RM70,000,000 to RM40,000,000.

Required:

(i) Classify each of the event as adjusting or unadjusting event.

(ii) Explain how each event should be treated in the financial statements 2019.

Homework Answers

Answer #1

A)i) decline in the fair value of investments between the end of the reporting period and the date when the financial statements are authorised for issue is a non adjusting event. The decline in fair value does not normally relate to the condition of the investments at the end of the reporting period. Instead, it reflects circumstances that have arisen subsequently. The entity does not, therefore, adjust the amounts recognised in its financial statements for the investments.

II) In respect of non-adjusting events, no adjustment is required in financial statements instead IAS 10 requires such events to be disclosed in the notes to accounts if these are considered to be material, otherwise these will be ignored. Here decline is of amount RM3000000 which can be considered as material . Therefore should be disclosed in notes to accounts

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