Assignment 1

Events after the Balance Sheet (SLAS 12)


1. What are the objectives of this standard is to prescribe?



• When an entity should adjust its financial statements for events after the balance sheet date; and

• The disclosures that an entity should give about the date when the financial statements were authorized for issue and about events after the balance sheet date.

The Standard also requires that an entity should not prepare its financial statements on a going concern basis if events after the balance sheet date indicate that the going concern assumption is not appropriate.



2. What are the events that we have to adjusted after the balance sheet? Give some examples.



• The bankruptcy of a customer that occurs after the balance sheet date usually confirms that a loss existed at the balance sheet date on a trade receivable and that the entity needs to adjust the carrying amount of the trade receivable; and

• The Sale of inventories after the balance sheet date may give evidence about their net realizable value at the balance sheet date.

• The determination after the balance sheet date of the cost of assets purchased, or the proceeds from assets sold, before the balance sheet date.

• The discovery of fraud or errors that show that the financial statements are incorrect.