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Fin 611 gdb solution
#1
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FinCo closes its account on March 31 each year. On 15th April 2012, a fire completely destroyed the
company's largest warehouse and the inventory it contained. The carrying amounts of the warehouse
and the inventory were Rs.10 million and Rs. 6 million respectively. It appears that the company has not
updated the value of its insurance cover and only expects to be able to recover a maximum of Rs. 9
million from its insurers. FinCo financial statements were authorized for issue by its directors on 10th
May 2012 and the AGM (annual general meeting) will be held on 10th June 2012.
Briefly describe with reference to IAS 10:
Whether it is an adjusting or non-adjusting event? (1 Mark)
How FinCo Limited will treat this even in its financial statements for the year ended 31st March 2012?
(1 Mark)
Solution:
(i) This is non-adjusting event as the condition arose after the balance sheet date.
(ii) An entity shall not recognize such event in the financial statement. It shall only be disclosed

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