The following events all occurred after the balance sheet date of 30 June 2012, but prior to the date of the audit report, 15 August 2012.Which one would require an adjustment to the account balances as at 30 June 2012?
A) Unused equipment recorded at $100 000 at 30 June, 2012 was disposed of on 3 July 2012 for $60 000.
B) Inventory valued at $100 000 on 30 June 2012 was destroyed by a fire on 1 August 2012.
C) The client disposed of a major subsidiary on 30 July 2012.
D) The auditee will market $2 million of preference shares on 31 July 2012.

Question

Quizplus · Accepted Answer

The disposal of unused equipment after the balance sheet date results in a change in the value of the assets at 30 June 2012. Therefore, an adjustment is required to reflect the decrease in the value of the asset. The other three events occurred after the audit date and have no effect on the account balances as at 30 June 2012.

The Following Events All Occurred After the Balance Sheet Date