Toffee plc (“Toffee”) is a manufacturer and distributor of confectionery goods. The company's year-end is 31 December. The directors of Toffee are due to sign the company’s financial statements for the year ended 31 December 2017 on 5 March 2018. The company accountant collapsed in early January 2018, leaving the assistant accountant to prepare the year-end financial statements. Due to lack of experience, the assistant accountant was unsure of the accounting treatment of the following items and thus ignored them when drafting the year-end accounts:

(a) On 13 February 2018, Toffee terminated a contract with Crisp Inc., a US company based in Dallas, Texas. The contract had been in place for a number of years. In early January 2018, Crisp Inc. had been the subject of a federal investigation carried out by the public health agency. Under the terms of the contract, Toffee is obliged to pay

€500,000 for early termination of the contract.

(b) Caramel used in the production of chocolate bars was included in year-end inventory at its cost of €120,000. Audit work carried out in February 2018 indicated that the caramel could have been purchased for €80,000 in January 2018, due to a fall in world commodity prices.

(c) During 2017 there had been industrial unrest amongst Toffee production workers following the automation of one of the manufacturing processes. Management had sought to make 20% of the workforce redundant. In February 2018, following protracted negotiations, it was agreed that 15% of the workforce would be made redundant at a cost of

€400,000.

(d) On 31 January 2018, €250,000 was paid to Tony Raisin as compensation for his removal as Marketing Director. Mr Raisin had been dismissed by the Chairman at the December 2017 Board meeting as a result of a serious disagreement over marketing strategy for 2018.

Requirement

(a) Define an event after the end of the reporting period and distinguish between an adjusting event after the end of the reporting period and a non-adjusting event after the end of the reporting period. .

(b) Explain briefly how each of the above transactions should be treated in the financial statements of Toffee for the year ended 31 December 2017, in accordance with the relevant accounting standard.