The following are material events that occurred for Yorba Linda Ltd between the reporting date and the date when the financial report is authorised for issue.
$\begin{array}{|l|l|}
\hline \text { I}& \text { Bankruptcy of a customer that occurs after the reporting date } \
\hline \text { II } & \begin{array}{l}
\text { Determination after the reporting date of the costs assets purchased before the } \
\text { reporting date }
\end{array} \
\hline \text { III} & \begin{array}{l}
\text { Decline in market value of investments after the reporting date of investments } \
\text { purchased before the reporting date }
\end{array} \
\hline \mathrm{IV} & \text { Dividends declared after the reporting date } \
\hline \mathrm{V} & \text { A lawsuit filed by a customer after the reporting date } \
\hline \text { VI }& \text { Discovery of fraud that shows that the financial report is incorrect }\
\hline
\end{array}$
Which of the following options identify all the adjusting events for Yorba Linda Ltd,in accordance with AASB 110 Events After the Reporting Period?
A) I, II and III
B) II, III and IV
C) I, II and VI
D) III, IV and V

Question

The following are material events that occurred for Yorba Linda Ltd between the reporting date and the date when the financial report is authorised for issue. 
$\begin{array}{|l|l|}
\hline \text { I}& \text { Bankruptcy of a customer that occurs after the reporting date } \
\hline \text { II } & \begin{array}{l}
\text { Determination after the reporting date of the costs assets purchased before the } \
\text { reporting date }
\end{array} \
\hline \text { III} & \begin{array}{l}
\text { Decline in market value of investments after the reporting date of investments } \
\text { purchased before the reporting date }
\end{array} \
\hline \mathrm{IV} & \text { Dividends declared after the reporting date } \
\hline \mathrm{V} & \text { A lawsuit filed by a customer after the reporting date } \
\hline \text { VI }& \text { Discovery of fraud that shows that the financial report is incorrect }\
\hline
\end{array}$
Which of the following options identify all the adjusting events for Yorba Linda Ltd,in accordance with AASB 110 Events After the Reporting Period?
A) I, II and III
B) II, III and IV
C) I, II and VI
D) III, IV and V

Quizplus · Accepted Answer

Adjusting events are those that provide evidence of conditions that existed at the end of the reporting period. In this case, the determination of the costs of assets purchased before the reporting date (II) and the discovery of fraud that shows the financial report is incorrect (VI) are clear examples of adjusting events because they provide additional evidence about conditions that existed at the reporting date. The bankruptcy of a customer (I) can also be considered an adjusting event if the bankruptcy provides evidence about the customer's ability to pay that existed at the reporting date.

The Following Are Material Events That Occurred for Yorba Linda