sent Rover Ltd has a year-end of 30 June 2022. The accountant has prepared the following schedule with details of several events and their proposed treatment in the financial statements. Event Proposed Treatment Write off $30,000 debt as it is irrecoverable. The notification of a customer's bankruptcy who owes $25,000 on 30 June 2022 and now owes $30,000. The liquidator has indicated that the debt will not be recoverable. A major production plant was destroyed by fire on 1 July 2022. No adjustment or reference to the issue is required as the fire took place after the year-end. Liability for dividends payable recognised. Ordinary dividends declared on 1 August 2022 regarding profits for the period ended 30 June 2022. Discovery of a significant fraud on 15 July 2022, resulting in losses to the company. No adjustment is required as the fraud was discovered after the period end. Required: In each of the instances above, explain whether the accountant has proposed the correct treatment and, if not, what the required treatment should be?
sent Rover Ltd has a year-end of 30 June 2022. The accountant has prepared the following schedule with details of several events and their proposed treatment in the financial statements. Event Proposed Treatment Write off $30,000 debt as it is irrecoverable. The notification of a customer's bankruptcy who owes $25,000 on 30 June 2022 and now owes $30,000. The liquidator has indicated that the debt will not be recoverable. A major production plant was destroyed by fire on 1 July 2022. No adjustment or reference to the issue is required as the fire took place after the year-end. Liability for dividends payable recognised. Ordinary dividends declared on 1 August 2022 regarding profits for the period ended 30 June 2022. Discovery of a significant fraud on 15 July 2022, resulting in losses to the company. No adjustment is required as the fraud was discovered after the period end. Required: In each of the instances above, explain whether the accountant has proposed the correct treatment and, if not, what the required treatment should be?
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 49P
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Rover Ltd has a year-end of 30 June 2022. The accountant has prepared the following
schedule with details of several events and their proposed treatment in the financial
statements.
Event
Proposed Treatment
The notification of a customer's
Write off $30,000 debt as it is
irrecoverable.
bankruptcy who owes $25,000 on 30
June 2022 and now owes $30,000. The
liquidator has indicated that the debt will
not be recoverable.
A major production plant was destroyed
by fire on 1 July 2022.
No adjustment or reference to the issue
is required as the fire took place after
the year-end.
Liability for dividends payable
recognised.
Ordinary dividends declared on 1
August 2022 regarding profits for the
period ended 30 June 2022.
Discovery of a significant fraud on 15
July 2022, resulting in losses to the
company.
No adjustment is required as the fraud
was discovered after the period end.
Required:
In each of the instances above, explain whether the accountant has proposed the correct
treatment and, if not, what the required treatment should be?
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