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As per para 13 of AS 4, Contingencies and Events Occurring After the Balance Sheet Date, assets and liabilities should be adjusted for events occurring
As per para 13 of AS 4, Contingencies and Events Occurring After the Balance Sheet Date, assets and liabilities should be adjusted for events occurring after the Balance Sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the Balance Sheet date. In the present case, before the closing of books of account, the immovable property was sold, i.e.. the agreement was effected before the Balance Sheet date but the registration was done after the Balance Sheet date. So, the adjustment must be made in the books of account for the year ended 31st March 2013 for the sale of immovable property. 09 Illustration 29. At the end of the financial year ending on 31st Dec. 2013, a company finds that there are twenty law- suits outstanding which have not been settled till the date of approval of accounts by the Board of Directors. The possible outcome as estimated by the Board is: Probability Loss In respect of 5 cases (Win) 100% Next Ten Cases (Win) 60% Lose (low damage) 30% 1.20,000 Lose (high damage) 10% 2,00,000 Remaining 5 cases: Win 50% Lose (low damage) 30% 1,00,000 Lose (high damage) 20% 2.10,000 Outcome of each case is to be taken as a separate entity. Ascertain the amount of contingent loss and the amounting treatment
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