Resave Question 16 (20 marks) - Subsequent events/post-audit discovery of facts The financial year of Buckley Limited ended on 30 June 20X5. Your auditor's report was signed on 25 August and the financial statements were issued on 10 September Listed below are events that occurred or were discovered after the end of the financial year. Assume that each has a material effect on the financial statements. 1.1 August - A lawsuit was filed against Buckley for damages that allegedly occurred before 30 June. In the opinion of Buckley's lawyers, there is a danger of a significant loss. 2. 15 August-You discovered that Daicos Limited, a debtor of Buckley went bankrupt on 10 August. The most recent sale had taken place on 25 May and no transactions had occurred since that date. 3.1 September-You discovered that a legal action commenced against Buckley in relation to a faulty product sold in May 20X5 4.15 September-A fire burnt down one of Buckley's warehouses, resulting in a loss of 30% of the inventory that was on hand at that date. 5.30 September-You discovered that Shepp Limited, a debtor of Buckley, went bankrupt on 15 July. Sales to Shepp Limited were all made before the end of the year. 2. 15 August - You discovered that Daicos Limited, a debtor of Buckley went bankrupt on 10 August. The most recent sale had taken place on 25 May and no transactions had occurred since that date. 3.1 September-You discovered that a legal action commenced against Buckley in relation to a faulty product sold in May 20X5. 4.15 September-A fire burnt down one of Buckley's warehouses, resulting in a loss of 30% of the inventory that was on hand at that date 5.30 September-You discovered that Shepp Limited, a debtor of Buckley, went bankrupt on 15 July. Sales to Shepp Limited were all made before the end of the year. Q16 Required a) Indicate your responsibilities for each of the above events. (2 marks each 10 marks) b) Indicate the type of adjustment or disclosure (if any) you would recommend in relation to each of the events. (2 marks each= 10 marks] HB i AX, X > 66 X