(a) The objective of IAS 10 Events after the Reporting Period is to prescribe the treatmen

(a) The objective of IAS 10 Events after the Reporting Period is to prescribe the treatment of events that occur after an entity’s reporting period has ended.


Define the period to which IAS 10 relates and distinguish between adjusting and non-adjusting events.

(5 marks)

(b) Waxwork’s current year end is 31 March 2009. Its financial statements were authorised for issue by its directors on 6 May 2009 and the AGM (annual general meeting) will be held on 3 June 2009. The following matters have been brought to your attention:

(i) On 12 April 2009 a fire completely destroyed the company’s largest warehouse and the inventory it

contained. The carrying amounts of the warehouse and the inventory were $10 million and $6 million

respectively. It appears that the company has not updated the value of its insurance cover and only expects

to be able to recover a maximum of $9 million from its insurers. Waxwork’s trading operations have been

severely disrupted since the fire and it expects large trading losses for some time to come. (4 marks)

(ii) A single class of inventory held at another warehouse was valued at its cost of $460,000 at 31 March

2009. In April 2009 70% of this inventory was sold for $280,000 on which Waxworks’ sales staff earned

a commission of 15% of the selling price. (3 marks)

(iii) On 18 May 2009 the government announced tax changes which have the effect of increasing Waxwork’s

deferred tax liability by $650,000 as at 31 March 2009. (3 marks)


Explain the required treatment of the items (i) to (iii) by Waxwork in its financial statements for the year

ended 31 March 2009.

Note: assume all items are material and are independent of each other. (10 marks as indicated)


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  • 提问人:00****31
  • 发布时间:2018-10-10
Flightline is an airline which treats its aircraft as complex non-current assets. The cost and other details of one of its aircraft are:No residual values are attributed to any of the component parts.At 1 April 2008 the aircraft log showed it had flown 10,800 hours since 1 April 2005. In the year ended 31 March 2009, the aircraft flew for 1,200 hours for the six months to 30 September 2008 and a further 1,000 hours in the six months to 31 March 2009.On 1 October 2008 the aircraft suffered a ‘bird strike’ accident which damaged one of the engines beyond repair. This was replaced by a new engine with a life of 36,000 hours at cost of $10·8 million. The other engine was also damaged, but was repaired at a cost of $3 million; however, its remaining estimated life was shortened to 15,000 hours. The accident also caused cosmetic damage to the exterior of the aircraft which required repainting at a cost of $2 million. As the aircraft was out of service for some weeks due to the accident, Flightline took the opportunity to upgrade its cabin facilities at a cost of $4·5 million. This did not increase the estimated remaining life of the cabin fittings, but the improved facilities enabled Flightline to substantially increase the air fares on this aircraftRequired:Calculate the charges to the income statement in respect of the aircraft for the year ended 31 March 2009 and its carrying amount in the statement of financial position as at that date.Note: the post accident changes are deemed effective from 1 October 2008.(10 marks)



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