Subsequent Events

Question 1

Adjusting events

Answer 1

• settlment of legal case after the year end.
• subsequent bankruptcy of debtors
• subsequent sale of inventory below cost
• subsequent finalization of purchased/sold price of assets which are purchased/sold before year end.
• subsequent discovery of error or fraud in F/S
• return of defective inventory after the year end.
• change in going concern assumption after the year end.

Question 2

Non-Adjusting Events

Answer 2

• sale or purchase of significant assets or business units.
• Major restructuring, discontinuance of operations.
• issue of share or debentures.
• appropriation of assets by gourmet.
• Destruction of assets by fire/flood.
• issuance of guarantees or commitments.
• Major litigation started after repotting period.
• Changes in tax law (or foreign exchange rates if abnormally large change).
• Customer cancelled order due to change in law.