Question $24(1$ point$)$

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Assuming all transactions are material, which of the following is LIKELY a subsequent event that requires adjustment in the financial statements?

Question $24$ options:

a$)$

The company determined subsequent to year end that, due to a power failure after year end, a significant amount of inventory that existed at year end had spoiled.

b$)$

The company decided after year end to pay compensation to the widow of a long$-$term employee who died before year end.

c$)$

An employee of the company was fired after year end, when it was discovered that he had been bribing government officials for the past three years. After year end, a penalty was imposed on the company related to this illegal act.

d$)$

A labour dispute was initiated and settled after year end, and the company must pay out retroactive wage increases for the past year.

Question $25(1$ point$)$

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Physio Inc., which reports under IFRS, is preparing its financial statements for the year ended December$31,$ Year $7.$

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Which of the following represents an event that would require an adjustment to the December $31,$ Year $7$ financial statements, assuming that they are authorized for issuance in March Year $8?$

Question $25$ options:

a$)$

In February Year $8,$ Physio purchased all the outstanding shares of Chiro Inc. Negotiations had been ongoing since August Year $7.$ All conditions of the sale were met in January Year $8,$ and subjects were not removed until February Year $8.$

b$)$

In January Year $8,$ the selling prices for the inventory on hand on December$31,$ Year $7$ fell, causing its net realizable value to be less than cost. The impairment existed in December Year $7$ but was undetected until January Year $8.$

c$)$

In January Year $8,$ a company truck, purchased in Year $5,$ was extensively damaged in an accident. As the truck is not repairable, it will be written off.

d$)$

In February Year $8,$ a fire destroyed supplies in one of the warehouses. The supplies were on hand on December $31,$ Year $7.$