Investment banks find it less difficult to price securities if the firm has prior issues currently selling in the market, called _________

(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.

Required:

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)

Required:

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)

听力原文：M: I have to go to Professor Hudson's place to discuss my thesis. But if time allowed, I'd go to the movies with you when I come back the dorm.

W: It's too bad. I am going to the cinema right now with Jane, and I don't think you could make it.

Q: What is the man going to do?

(19)

A．He is going to Professor Hudson's home.

B．He is going to the movies with the woman.

C．He is going to the cinema with Jane.

D．He is going to the dorm to write his thesis.

It is very difficult to prove today that a painting done two or three hundred years ago, especially one without a signature or with a questionably authentic signature, is indubitably the work of this or that particular artist. This fact gives the traditional attribution of a disputed painting special weight, since that attribution carries the presumption of historical continuity. Consequently, an art historian arguing for a deattribution will generally convince other art historians only if he or she can persuasively argue for a specific reattribution. Which one of the following, if true, most strongly supports the position that the traditional attribution of a disputed painting should not have special weight?

A．Art dealers have always been led by economic self-interest to attribute any unsigned paintings of merit to recognized masters rather than to obscure artists.

B．When a painting is originally created, there are invariably at least some eyewitnesses who see the artist at work, and thus questions of correct attribution cannot arise at that time.

C．There are not always clearly discernible differences between the occasional inferior work produced by a master and the very best work produced by a lesser talent.

D．Attribution can shape perception inasmuch as certain features that would count as marks of greatness in a master"s work would be counted as signs of inferior artistry if a work were attributed to a minor artist.

E．Even though some masters had specialists assist them with certain detail work, such as depicting lace, the resulting works are properly attributed to the masters alone.

(b) You are an audit manager in a firm of Chartered Certified Accountants currently assigned to the audit of Cleeves

Co for the year ended 30 September 2006. During the year Cleeves acquired a 100% interest in Howard Co.

Howard is material to Cleeves and audited by another firm, Parr & Co. You have just received Parr’s draft

auditor’s report for the year ended 30 September 2006. The wording is that of an unmodified report except for

the opinion paragraph which is as follows:

Audit opinion

As more fully explained in notes 11 and 15 impairment losses on non-current assets have not been

recognised in profit or loss as the directors are unable to quantify the amounts.

In our opinion, provision should be made for these as required by International Accounting Standard 36

(Impairment). If the provision had been so recognised the effect would have been to increase the loss before

and after tax for the year and to reduce the value of tangible and intangible non-current assets. However,

as the directors are unable to quantify the amounts we are unable to indicate the financial effect of such

omissions.

In view of the failure to provide for the impairments referred to above, in our opinion the financial statements

do not present fairly in all material respects the financial position of Howard Co as of 30 September 2006

and of its loss and its cash flows for the year then ended in accordance with International Financial Reporting

Standards.

Your review of the prior year auditor’s report shows that the 2005 audit opinion was worded identically.

Required:

(i) Critically appraise the appropriateness of the audit opinion given by Parr & Co on the financial

statements of Howard Co, for the years ended 30 September 2006 and 2005. (7 marks)