22. A new drug named "EEE" was introduced by Genius Inc. in the market on December 1, 2005.Genius Inc.'s financial year ends on December 31,2005. It was the only company that was permitted tomanufacture this patented drug. The drug is used by patients suffering from an irregular heartbeat. OnMarch 31, 2006, after the drug was introduced, more than 1,000 patients died. After a series ofinvestigations, authorities discovered that when this drug was simultaneously used with "BBB," a drugused to regulate hypertension, the patient's blood would clot and the patient suffered a stroke. A lawsuitfor GHS100,000,000 has been filed against Genius Inc. The financial statements were authorized forissuance on April 30, 2006. Which of the following options is the appropriate accounting treatment forthis post-statement of financial position event under IAS 10?(a) The entity should provide GHS100,000,000 because this is an "adjusting event" and the financialstatements were authorized to be issued after the accident.(b) The entity should disclose GHS100,000,000 as a contingent liability because it is an "adjustingevent."5(c) The entity should disclose GHS100,000,000 as a "contingent liability" because it is a presentobligation with an improbable outflow.(d) Assuming the probability of the lawsuit being decided against Genius Inc. is remote, the entityshould disclose it in the footnotes, because it is a non-adjusting material event.23. At the statement of financial position date, December 31, 2021, ABC Inc. carried a receivable fromXYZ, a major customer, at GHS10 million. The "authorization date" of the financial statements is onFebruary 16, 2022. XYZ declared bankruptcy on Valentine's Day (February 14, 2022). ABC Inc. will(a) Disclose the fact that XYZ has declared bankruptcy in the footnotes.(b) Make a provision for this post-statement of financial position event in its financial statements (asopposed to disclosure in footnotes).(c) Ignore the event and wait for the outcome of the bankruptcy because the event took place after theyear-end.(d) Reverse the sale pertaining to this receivable in the comparatives for the prior period and treat this asan "error" under IAS 8.

Answered: issuance on April 30, 2006. Which of…

issuance on April 30, 2006. Which of the following options is the appropriate accounting treatment for this post-statement of financial position event under IAS 10?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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