Management of Utopia Plc has become aware after reporting date that a major customer is insolvent.The customer apparently went into receivership before Utopia's reporting date and owes Utopia a material amount for inventory purchased during the period.According to IAS 10,how should this event be treated in Utopia's financial statements?
A)The account receivable should be written off.
B)The event should be disclosed in the notes to the financial statements, including information about the financial effect of the customer's insolvency.
C)No reporting is required.
D)The directors are required to disclose the event in the Directors' Report.

Question

Quizplus · Accepted Answer

This is an adjusting event after the reporting period as the condition (customer's insolvency) existed before the reporting date. Therefore, the account receivable should be written off in the financial statements.

Management of Utopia Plc Has Become Aware After Reporting Date