1. ABC Limited decides to operate a new amusement park that will cost $10 million to build in the year 2015. Its financial year end is December 31, 2015. ABC Limited has applied for a letter of guarantee for $7 million. The letter was issued on March 31, 2016. The audited financial statements have been authorized to be issued on April 18, 2016.

Required:

Determine the adjustment required to be made in the financial statements for the year ended December 31, 2015.

1. Shiny Corp. carries its inventories at the lower of cost and the net realisable value. At December 31, 2015, the cost of inventory determined under FIFO as reported in the financial statements for the year then ended was $10 million. Due to severe recessions and other negative economic trends in the market, the inventory could not be sold during the entire month of January 2016. On February 10, 2016, Shiny Corp. entered into an agreement to sell the entire inventory to a competitor for $6 million.

Required:

If the financial statements were authorized for issuance on February 15, 2016, should Shiny Corp. recognize a write-down of $4 million in the financial statements for the year ended 31 December, 2015?

At the balance sheet date, December 31, 2018, John Smith PLC carried a receivable from XYZ, a major customer, at $20 million. The financial statements were authorized on February 16, 2019. XYZ declared bankruptcy on Valentine's Day(February 14, 2019).

Required:

1. Advise John Smith PLC's management how to proceed having regards to IAS10.(Hint: disclose or recognize)

International Inc. deals extensively with foreign entities, and its financial statements reflect these foreign currency transactions. Subsequent to the balance sheet date and before the authorization of the issuance of the financial statements, there were abnormal fluctuations in foreign currency rates.

Required:

1. How should the management of International Inc. treat with these events in its financial statements?