You are the assigned audit partner on the audit of Only Orange Ltd, a manufacturer of orange juice in Australia. The financial report date is 30 June 2022, and the directors' declaration and audit report was signed the 5^th August 2022. The financial report accompanied by the signed audit report were released on 9^th August 2022. Consider each of the following independent events:

1. On 15^th July 2022, your client agreed to purchase for cash the outstanding shares of Snappy Apples Ltd. The acquisition is will introduce a new revenue stream by adding apple juice to the product line and has the potential to double the sales volume of your client.

2. On 28^th July 2022, flooding in Queensland results in the loss of a material amount of inventory which will impact the first quarter results of 2023.

3. On 6^th August 2022, your client settled and paid a personal injury claim to a former employee as the result of a serious accident that occurred in April 2022. The former employee was seeking compensation of $1.5 million as the accident occurred due to an overlooked problem with one of the machines on the factory floor, but no provision had been made as Only Orange was confident of winning the case. Final settlement was $1.2 million, which is a material amount for Only Orange Ltd.

Required:

(a) For each of the above events, identify whether it is a non-adjusting or an adjusting event and indicate the recommended response from your audit team [9 marks].

Event	Adjusting or non-adjusting event?	Recommended response
1
2
3

(b) On the 21^st August 2022 you discover that Jimmy's Juices, a major customer of Only Oranges Ltd had gone bankrupt on 8^th August 2022, owing a material amount to Only Oranges. The liquidator indicates to you that Jimmy's Juices has been in financial difficulties for some time and your client is unlikely to receive any of these funds. Only Oranges Ltd had provided for 5% of the amount owed as doubtful debt for financial year 2022.What are your responsibilities as the auditor in relation to this discovery? [4 marks]