I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

QUESTION 

Events after the reporting period

 

State whether the following events occurring after the reporting period require an adjustment to the 

assets and liabilities of the financial statements. 

(a) 

Purchase of an investment 

(b) 

A change in the rate of tax, applicable to the previous year 

(c) 

An increase in pension benefits 

(d) 

Losses due to fire 

(e) 

An irrecoverable debt suddenly being paid 

(f) 

The receipt of proceeds of sales or other evidence concerning the net realisable value of inventory 

(g) 

A sudden decline in the value of property held as a long-term asset 

ANSWER 

(b), (e) and (f) require adjustment.  

Of the other items, (a) would not need to be disclosed at all. Item (c) could need a disclosure if the cost to 

the company is likely to be material. Item (d) again would be disclosed if material, as would (g) if material.  

Assuming that item (d) is material, it would be disclosed by way of the following note to the accounts. 

(The company year end is 31 December 20X8.)