Accounting · IAS 10 Events After the Reporting Period
On 31 December 20X4, Eagle Co's draft statement of financial position reports net assets of $4 million. Included in this is a receivable of $20,000 from a customer who entered bankruptcy on 20 January 20X5. The customer had been suffering from financial difficulties for several months; however, Eagle Co was unaware of this at 31 December 20X4. Eagle Co's financial statements are authorised for issue on 15 February 20X5. How should Eagle Co treat the bankruptcy of the customer when preparing the 20X4 financial statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1As an adjusting event, by recognising an impairment loss in relation to the receivable amount and a corresponding expense✓
- 2As a non-adjusting event, by disclosing the bankruptcy and continuing to recognise the receivable at $20,000
- 3As an adjusting event, by recognising an impairment loss in relation to the receivable amount and a corresponding reduction to revenue
- 4As a non-adjusting event, by continuing to recognise the receivable at $20,000, but not making additional disclosure
Correct answer
As an adjusting event, by recognising an impairment loss in relation to the receivable amount and a corresponding expense
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