Economics · Accounting Standards - Subsequent Events
Under IAS 10 (Events After the Reporting Period), a devastating flood that destroys a major warehouse after the reporting period but before the financial statements are authorized for issue is categorized as which type of event, and what is its accounting treatment?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Non-adjusting event; a contingent asset must be recognized in the statement of financial position for anticipated insurance recoveries.
- 2Non-adjusting event; inventory is not written down at the reporting date, but material uninsured losses must be disclosed in the notes.✓
- 3Adjusting event; a provision for the repair and replacement of the warehouse must be recognized.
- 4Adjusting event; inventory must be written down to its net realizable value at the reporting date.
Correct answer
Non-adjusting event; inventory is not written down at the reporting date, but material uninsured losses must be disclosed in the notes.
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