Adjusting Events

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Subsequent events discovered can be adjusting or non-adjusting

The basic difference is..

(and yes I know it's obvious you amoooosing monkey head, but I don't make this syllabus up!)

  • Adjusting
    Events which require the FS to be adjusted to provide a ‘true and fair view’

  • Non-Adjusting
    Events which do not require the FS to be adjusted to provide a ‘true and fair view’

Adjusting Events

  1. These provide additional evidence relating to conditions existing at the balance sheet date

  2. An example is:

    Inventory sold after the year end below cost
    This provides evidence that the valuation of inventory at the Y/E was incorrect.

  3. The financial statements should be adjusted

Non-Adjusting Events

  1. These are events which are not adjusting :)))

  2. An example of a non-adjusting event is:

    • A fire which destroys inventory after the balance sheet date
      This does not provide evidence of conditions existing at the Y/E, but will still need disclosing (not adjusting) if material

  3. These events should be disclosed in the financial statements

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