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EVENTS AFTER THE BALANCE SHEET DATE, PROVISIONS AND CONTINGENCIES As the financial controller of ABC Ltd, you are responsible for preparing the companys financial statements
EVENTS AFTER THE BALANCE SHEET DATE, PROVISIONS AND CONTINGENCIES
As the financial controller of ABC Ltd, you are responsible for preparing the companys financial statements and are at present finalizing these for the year ended 31st March 20X9 for presentation to the Board of Directors. The following items are material:
- Costs of 250,000 arose from the closure of the companys factory in Monash, which manufactured coffins. Owing to a declining market, the company has withdrawn from this type of business prior to the year-end.
- You discover that during February 20X9, whilst you were away skiing, the cashier took advantage of the weakness in internal control to defraud the company of 30,000.
- During the year ended 31st March 20X9, stocks of obsolete electrical components had to be written down by 250,000 owing to foreign competitors producing them more cheaply.
- At a board meeting on 30th April 20X9, the directors signed an agreement to purchase the business of Mr. William (a small computer manufacturer) for the sum of 100,000.
- 300,000 of development expenditure, which had been capitalised in previous years, was written off during the year ended 31st March 20X9. This became necessary due to foreign competitors price-cutting, which cast doubt on the recovery of costs from future revenue.
- Dynatron Ltd, a customer, owed the company 50,000 on 31st March 20X9. However, on 15th May 20X9, it went into creditors voluntary liquidation. Of the 50,000, 40,000 is still outstanding and the liquidator of Dynatron is expected to pay approximately 25p in the to unsecured creditors.
- On 30th April 20X9, the company mad a 1 for 4 rights issue to the ordinary shareholders, which involved the issue of 50,000 1 shares for a sum of 62,500.
Required
Explain how you will treat the above in the financial statements, and give a brief explanation of why you are adopting your proposed treatment.
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