Stuart Mcleay is the senior partner for the financial report audit of Honeybee Toys Australia Ltd for the year ended 30 June 2020. The following material events or transactions have come to Stuart’s attention before he is scheduled to issue his report on 31 August 2020: (a) On 14 July 2020, Honeybee settled and paid a personal injury claim of a former employee as a result of an accident that occurred in March 2019. The company has not previously recorded a liability for the claim. (b) On 17 July 2020, Honeybee agreed to purchase for cash the outstanding shares of baby’s Equipment Ltd. This acquisition is likely to double the sales volume of Honeybee (c) On 20 July 2020, the directors became aware of broken glass found in their pre-packaged sandpits. This product had only been on sale for two weeks and had been purchased directly from the manufacturer, Rockpit Ltd, an unrelated company in Korea, one week prior to being introduced to the public. (d) On 3 August 2020, a plant owned by Honeybee was damaged in a flood, resulting in an uninsured loss of inventory. Required For each of the above events or transactions, determine the treatment required and identify audit procedures that should have brought the item to the auditor’s attention in the financial report for the year ended 30 June 2020.
Stuart Mcleay is the senior partner for the financial report audit of Honeybee Toys Australia Ltd for the year ended 30 June 2020. The following material events or transactions have come to Stuart’s attention before he is scheduled to issue his report on 31 August 2020:
(a) On 14 July 2020, Honeybee settled and paid a personal injury claim of a former employee as a result of an accident that occurred in March 2019. The company has not previously recorded a liability for the claim.
(b) On 17 July 2020, Honeybee agreed to purchase for cash the outstanding shares of baby’s Equipment Ltd. This acquisition is likely to double the sales volume of Honeybee
(c) On 20 July 2020, the directors became aware of broken glass found in their pre-packaged sandpits. This product had only been on sale for two weeks and had been purchased directly from the manufacturer, Rockpit Ltd, an unrelated company in Korea, one week prior to being introduced to the public.
(d) On 3 August 2020, a plant owned by Honeybee was damaged in a flood, resulting in an uninsured loss of inventory.
Required
For each of the above events or transactions, determine the treatment required and identify
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