The following information relates to Micron Traders Limited (MTL). During early February 2020 and before the...

 

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The following information relates to Micron Traders Limited (MTL). During early February 2020 and before the financial statements for the year ended 31 December 2020 had been approved by the board, the following events occurred: A) A large debtor of MTL's goes bankrupt and the company is expected to lose $3.2 million. B) MTL Limited had provided $2.6 million at 31 December 2020 to cover possible damages for a case pending in court, however the matter was unexpectedly settled in its favour. C) MTL's' warehouse was destroyed by fire and half of the inventory on site at 31 December 2020, valued at $3.8 million, was destroyed. REQUIRED: Define Events After the Balance Sheet Date as per IAS10 and explain how each of the above events should be treated in the financial statements as at 31 December 2020 in accordance with IAS 10. PART B The directors of Clarendon Enterprise Limited (CEL)are uncertain of the difference between a provision and a contingent liability. Write a brief explanation explaining both concepts to give them clarity. The following information relates to Micron Traders Limited (MTL). During early February 2020 and before the financial statements for the year ended 31 December 2020 had been approved by the board, the following events occurred: A) A large debtor of MTL's goes bankrupt and the company is expected to lose $3.2 million. B) MTL Limited had provided $2.6 million at 31 December 2020 to cover possible damages for a case pending in court, however the matter was unexpectedly settled in its favour. C) MTL's' warehouse was destroyed by fire and half of the inventory on site at 31 December 2020, valued at $3.8 million, was destroyed. REQUIRED: Define Events After the Balance Sheet Date as per IAS10 and explain how each of the above events should be treated in the financial statements as at 31 December 2020 in accordance with IAS 10. PART B The directors of Clarendon Enterprise Limited (CEL)are uncertain of the difference between a provision and a contingent liability. Write a brief explanation explaining both concepts to give them clarity.

Answer rating: 100% (QA)

Events After the Balance Sheet Date ABSD refer to those occurrences that happen between the end of the reporting period and the date when the financial statements are authorized for issue According to ... View the full answer