Robson Plc (Robson) closed its accounts on 31 March 2021. Its financial statements were approved on...

 

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Robson Plc (Robson) closed its accounts on 31 March 2021. Its financial statements were approved on 31 May 2021 and the annual general meeting is scheduled to be held on 30 June 2021. The following matters have been brought to your attention: (i) On 30 April 2021, Robson gets to know that one of their debtors who owed them £70 million, (as per the Statement of Financial Position) is declared bankrupt. Robson's lawyers, based on their discussions advise Robson that no money is expected to be received from the said debtor. (4 marks) (ii) Robson was sued by one of its suppliers for selling substandard goods. Robson had protested against this allegation and as at 31 March 2021, the case was still pending in the court and there was a 50% chance that Robson would win the case. In April 2021 the court judgement was against Robson and the company had to pay the supplier £2 million as damages. (4 marks) (iii) On 18 May 2021 an earthquake in one of the remote regions of Indonesia caused a drop in the stock market prices of a company in which Robson had heavily invested. The loss is expected to be £6.5 million. (4 marks) Required: Explain the required treatment of the items (1) to (iii) by Robson Plc in its financial statements for the year ended 31 March 2021 in accordance with IAS 10, Events after the reporting period. Note: assume all items are material and are independent of each other. Robson Plc (Robson) closed its accounts on 31 March 2021. Its financial statements were approved on 31 May 2021 and the annual general meeting is scheduled to be held on 30 June 2021. The following matters have been brought to your attention: (i) On 30 April 2021, Robson gets to know that one of their debtors who owed them £70 million, (as per the Statement of Financial Position) is declared bankrupt. Robson's lawyers, based on their discussions advise Robson that no money is expected to be received from the said debtor. (4 marks) (ii) Robson was sued by one of its suppliers for selling substandard goods. Robson had protested against this allegation and as at 31 March 2021, the case was still pending in the court and there was a 50% chance that Robson would win the case. In April 2021 the court judgement was against Robson and the company had to pay the supplier £2 million as damages. (4 marks) (iii) On 18 May 2021 an earthquake in one of the remote regions of Indonesia caused a drop in the stock market prices of a company in which Robson had heavily invested. The loss is expected to be £6.5 million. (4 marks) Required: Explain the required treatment of the items (1) to (iii) by Robson Plc in its financial statements for the year ended 31 March 2021 in accordance with IAS 10, Events after the reporting period. Note: assume all items are material and are independent of each other.

Answer rating: 100% (QA)

According to Ind AS 10 Occasions after the Reporting Period Events subsequent to announcing period a... View the full answer