It is 1 July 20X5. You are an audit manager at North & Co working on the audit of Caspian Co, a manufacturer of refrigeration products. You are finalising the audit of the financial statements for the year ended 30 April 20X5. The draft financial statements of Caspian Co show a profit before tax of $8.5m and total assets of $36m. Subsequent events On 16 May 20X5, Caspian Co received a letter from the administrators of one of its customers, which had been experiencing financial difficulties for a number of months, stating that Caspian Co would only receive $0.35 for every $1 outstanding. The financial statements include a trade receivable of $81,000 at 30 April 20X5 and have not been adjusted to take this additional information into account. On 25 May 20X5, a defect was discovered in one of Caspian Co's major products, resulting in a recall of all sales of that product since 1 July 20X4. The product recall commenced on 21 May 20X5 and none of the products will be resold. The directors of Caspian Co have estimated the cost of the recall to be $2m and have appropriately accounted for this in line with lAS 10 Events