Question 1

Gyamfuaa Company carried a provision of GHS 200,000 in its draft financial statements to 31 March 2008 in relation to an unresolved court case. On 27 April 2008, when the financial statements to 31 March 2008 had not yet been authorized for issue, the case was settled and the court decided the final total damages payable by Gyamfua to be GHS 280,000. According to IAS10 Events after the reporting period, what should be the accounting treatment in relation to this event?

Question 2

Romeo Creation Ltd draft financial statements show the profit before taxation for the year to 31 December 2007 as GHS 9 million. The board of directors is to authorize the financial statements for issue on 20 March 2008. A fire occurred at one of Romeo sites on 13 January 2008 with resulting damage costing GHS 7 million, only GHS 4 million of which is covered by insurance. The repairs will take place and be paid for in April 2008. The GHS 4 million claim from the insurance company will however be received on 14 February 2008. Taking account of these events in accordance with IAS10 Events after the reporting period,

a) How should Romeo account for the above event?

b) What should be Romeo's profit before taxation in its financial statements?

Question 3

a) Distinguish adjusting and non-adjusting events

b) Distinguish between right issue and bonus capitalization