Q6- Teign Ltd prepares its financial statements to 30 September each year. The following events took place between 30 September and the date on which the financial statements were authorised for issue. (i) The company made a major purchase of plant and machinery. (ii) A customer who owed the company money at 30 September was declared bankrupt. Which of the above is likely to be classified as an adjusting event according to IAS 10 Events After the Reporting Period?

Q7- You have been asked to help prepare the financial statements of Merched Ltd for the year ended 31 March 20X3. Legal proceedings have been started against the company because of faulty products supplied to a customer. The companys lawyers advise that it is probable that the entity will be found liable for damages of 250,000. Explain how you would treat the probable damages arising from the legal proceedings in the financial statements. Refer, where relevant, to accounting standards.