Zamrud Bhd’s current year end is 31 December 2015. Its financial statements were authorised for issue by its directors on 6 march 2016. i. During the first week of April 2016, the company held a “sales” to clear the old inventories of 2015 Christmas goods and 2016 Chinese New Year Goods, where all the goods were sold at 40% cost. In early December 2015, the company purchased RM 1500000 of Christmas goods and RM 1200000 of Chinese New Year goods and as at 31 December 2015, RM 225000 of Christmas goods and all the RM 980000 goods were in store. These goods were carried at cost and no provision has been made as at 31 December 2015. ii. On 18 February 2016, the government announced tax changes which have the effect of increasing Zamrud Bhd’s deferred tax liability by RM 437000 as at 31 December 2015. Discuss whether the above post balance sheet events should be classified as ‘adjusting’ or ‘non-adjusting’ events and suggest appropriate accounting treatment in accordance to MFRS 110: Events after the reporting period
Zamrud Bhd’s current year end is 31 December 2015. Its financial statements were authorised for issue by its directors on 6 march 2016.
i. During the first week of April 2016, the company held a “sales” to clear the old inventories of 2015 Christmas goods and 2016 Chinese New Year Goods, where all the goods were sold at 40% cost. In early December 2015, the company purchased RM 1500000 of Christmas goods and RM 1200000 of Chinese New Year goods and as at 31 December 2015, RM 225000 of Christmas goods and all the RM 980000 goods were in store. These goods were carried at cost and no provision has been made as at 31 December 2015.
ii. On 18 February 2016, the government announced tax changes which have the effect of increasing Zamrud Bhd’s
Discuss whether the above post
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