Q10.1 On 30 July 2021, the Department of Environmental Services began legal proceedings against Simon Ltd for a major leak due to toxic smoke being released from Soluble Ltd's factory into the atmosphere. The leak occurred on 25 June 2021. If found to be negligent by the court, Simon Ltd is liable to pay a material sum of $200,000 to the Department of Environmental Services. In addition, Simon Ltd will also need to pay damages to local residents and legal fees totalling $150,000. Assume the event is material and that Simon Ltd had not issued its 2021 Financial Statements on 30 July 2021. Required: Classify the above event occurring after the end of the reporting period as an adjusting or a non-adjusting event and explain the reason. Explain the impact, if any, on the financial statements of Simon Ltd for the year ended 30 June 2021 to comply with AASB110 Events after the Reporting Period. Please type your answer below:

Q10.1 On 30 July 2021, the Department of Environmental Services began legal proceedings against Simon Ltd for a major leak due to toxic smoke being released from Soluble Ltd's factory into the atmosphere. The leak occurred on 25 June 2021. If found to be negligent by the court, Simon Ltd is liable to pay a material sum of $200,000 to the Department of Environmental Services. In addition, Simon Ltd will also need to pay damages to local residents and legal fees totalling $150,000. Assume the event is material and that Simon Ltd had not issued its 2021 Financial Statements on 30 July 2021. Required: Classify the above event occurring after the end of the reporting period as an adjusting or a non-adjusting event and explain the reason. Explain the impact, if any, on the financial statements of Simon Ltd for the year ended 30 June 2021 to comply with AASB110 Events after the Reporting Period. Please type your answer below:

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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