Polyolefins such as polyethylene undergo slow degradation when placed in air. Degradation occurs by reactions with atmospheric oxygen that lead to the formation of carbonyl groups (groups containing oxygen), gradual….
Explain how these events would be accounted for in accordance with the requirements of AASB 110 ‘Events after the Reporting Period’.
As at 30 June 2018, Montford Ltd has assets of $18 million, liabilities of $12 million,
ordinary share capital of $4 million and retained earnings of $2 million. The company’s
revenue from ordinary activities for 2017–2018 is $36 million and the net profit is
$1.6 million. As the accountant for Montford Ltd you are reviewing, on 20 August 2018,
the following events which occurred after the end of the reporting period:
(a) On 18 July 2018, one of Montford’s three warehouses was destroyed by fire. The
estimate of damage is $950 000.
(b) On 20 July 2018, the following judgement against Montford Ltd was handed down
in the Supreme Court of Victoria: that the defendant pay $275 000 to Roundhay Ltd.
Explain how these events would be accounted for in accordance with the requirements
of AASB 110 ‘Events after the Reporting Period’. (LO3)