An earthquake destroyed a major warehouse of ACO Ltd. on 20.5.2012. The accounting year of the company ended on 31.3.2012. The accounts were approved on 30.6.2012. The loss from earthquake is estimated at 7 30 lakhs. State with reasons, whether the loss due to earthquake is an adjusting or non-adjusting event and how the fact of loss is to be disclosed by the mom ny. uia 8.3 of AS 4 "Contingencies and Events Occurring after the Balance Sheet Date", states that adjustments to assets and liabilities are not appropriate for events occurring after the balance sheet date, if such events do not relate to conditions existing at the balance sheet date. The destruction of warehouse due to earthquake did not exist on the balance sheet date 02 i.e. 31.3.2012. Therefore, loss occurred due to earthquake is not to be recognised in the financial year 2011-2012 However, according to para 8.6 of the standard, unusual changes affecting the existence or substratum of the enterprise after the balance sheet date may indicate a need to consider the use of fundamental accounting assumption of going concern in the preparation of the financial statements. As per the information given in the question, the earthquake has caused major destruction; therefore fundamental accounting assumption of going concern is called upon. Hence, the fact of earthquake together with an estimated loss of 30 lakhs should be disclosed in the Report of the Directors for the financial year 2011-2012 A company has filed a legal suit against the debtor from whom 15 lakh is recoverable as on 31.3.2012. The chances of recovery by way of legal suit are not good as per legal opinion given by the counsel in April, 2012. Can the company provide for full amount of 15 lakhs as provision for doubtful debts? Discuss in detail