Part A

KPMG Australia was auditing an Australian company named Alliance Group for the year ended 30 June 2020. They noticed some events taking place after 30 June 2020 as follows:

Scenario A 18 July 2020: Alliance Groups main fishing fleet was sunk during a freak storm. Insurance will cover the replacement of the vessels but lost sales representing $750 000 in profits are not covered.

Scenario B 20 July 2020: Alliance group took delivery of a fishing net for its prawn trawler. The net was purchased from an overseas supplier on delivered duty paid shipping terms and was in transit at the end of the reporting period. An inspection of the net revealed significant structural flaws and the net was returned to the supplier on 28 July 2020. Alliance group is to receive a full refund of the $850 000 purchase price which had been paid in advance on 30 June 2020.

Scenario C 27 August 2020: a lawsuit was lodged against the company by the families of crew members drowned in the 18 July storm, alleging negligence, and claiming $5 million in damages. No date has as yet been set for the court hearing.

Scenario D 1 September 2019: the directors resolved to issue to the public 10 000 5% debentures of $12 each, payable $5 on application, $5 on allotment, and remaining $2 on call.

Required:

For each scenario above, advise whether it is an adjusting or non-adjusting event and provide a brief explanation