Sugarcane Manufacturers experienced an explosion at their plant in the early hours of the morning of 12 June 20.13. The sugarcane cutting machine had a socket glitch that caused an explosion in the electrical box of the processing building. The explosion has caused serious fires to the neighboring sugarcane farms that were expecting harvest in the next three weeks. Half of the neighboring plantation has been burned already before the arrival of the firefighters. With the concerns on the losses, Sugarsweet Plantation has taken legal action against their burned plantation, as well as halt in the harvesting time and loss of customers. Legal claim has been filed as below: Loss of inventory: $ 500,000.00 Damage to property: $ 100,000.00 Delay in harvests while Incurring costs: $ 100,000.00 Loss of customer base: $ 1,000,000.00 The claim has been presented to court on the 20 June 2020. After through investigations, the court has identified the below when giving ruling. The ruling has been submitted on the 15 July 2020. The fire had only affected 20% of the Sugarsweet plantation. The fire did not reach the property of Sugarsweets building and the smoke stain on the buildings can be removed and the buildings re-painted. Harvests may still take place in the time planned for by SugarSweet and no delays expected. Loss of sales due to the fire are estimated to be at $1,500,000.00. This is the only claimed that has been ruled in favour of SugarSweet. Required: a) what are the requirements of accounting for events after reporting period as per IAS(international accounting standards) 10. b)what is the accounting treatment of the event above in the financial statement of Sugarcane Manufacturing for the period ended 30 June 2020. c) Disclose the events above in the financial statement of Sugarcane Manufacturers for the financial period ended 30 June 2020.
Question 1
Sugarcane Manufacturers experienced an explosion at their plant in the early hours of the morning of 12 June 20.13.
The sugarcane cutting machine had a socket glitch that caused an explosion in the electrical box of the processing building.
The explosion has caused serious fires to the neighboring sugarcane farms that were expecting harvest in the next three weeks. Half of the neighboring plantation has been burned already before the arrival of the firefighters.
With the concerns on the losses, Sugarsweet Plantation has taken legal action against their burned plantation, as well as halt in the harvesting time and loss of customers. Legal claim has been filed as below:
Loss of inventory: $ 500,000.00
Damage to property: $ 100,000.00
Delay in harvests while Incurring costs: $ 100,000.00
Loss of customer base: $ 1,000,000.00
The claim has been presented to court on the 20 June 2020. After through investigations, the court has identified the below when giving ruling. The ruling has been submitted on the 15 July 2020.
The fire had only affected 20% of the Sugarsweet plantation.
The fire did not reach the property of Sugarsweets building and the smoke stain on the buildings can be removed and the buildings re-painted.
Harvests may still take place in the time planned for by SugarSweet and no delays expected. Loss of sales due to the fire are estimated to be at $1,500,000.00. This is the only claimed that has been ruled in favour of SugarSweet.
Required:
a) what are the requirements of accounting for events after reporting period as per IAS(international accounting standards) 10.
b)what is the accounting treatment of the event above in the financial statement of Sugarcane Manufacturing for the period ended 30 June 2020.
c) Disclose the events above in the financial statement of Sugarcane Manufacturers for the financial period ended 30 June 2020.
Step by step
Solved in 3 steps
