The draft financial statements of X Ltd. are under consideration. The accounting treatment of the following material

Question:

The draft financial statements of X Ltd. are under consideration. The accounting treatment of the following material events after the balance sheet date needs to be determined.
1. The insolvency of a major customer with a substantial debt outstanding at the balance sheet date.
2. A fire destroying some of the company’s inventory (the company’s going concern status is not affected).
3. An issue of shares to finance expansion.
4. Sale for less than cost of some inventory held at the balance sheet date. According to AS--4 (Events after Balance Sheet date), which of the above events require an adjustment to the figures in the draft financial statements ?
A. 1 and 4 only
B. 1, 2 and 3 only
C. 2 and 3 only
D. 2 and 4 only

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Question Posted: