MFRS110 Events After Reporing Period

Question
The following arose after the reporting period whilst the annual
audit was still being carried out:

(1) The company invested RM700,000 in a public listed company

whose share price have dropped by 40% since the reporting
period.
(2) A customer sued the company of RM700,000 for pain and agony
caused after consuming the company’s product. The company
had made a provision for liability of RM100,000. The court case
was pending at the end of the financial year. However, after the
end of financial year the case came to court and the judgment was
in favour of the customer who was awarded damages of
RM500,000.
(3) The company signed a contract to acquire factory building, at an
estimated cost of RM18 million after the end of financial year.
(4) The branch manager stole RM10,000 from the safe located in the
branch office.
(5) A customer who owed RM180,000 was declared a bankrupt
after the end of the financial year. It is the company's policy not
to make provision for doubtful debts on all its trade receivables
during the financial year.

Required:
For each of the above post reporting date event, identify the type
of event, explain the action and the accounting treatments, in
accordance with MFRS110 Events After Reporing Period.
 Answer
1 It is a non-adjusting event. Unable to measure the financial effect.

2 It is an adjusting event.
Journal entries Debit Credit
RM RM
Compensation to customer provision (SOPL) 100,000.00
Provision for compensation to customer (SOFP) 100,000.00
Compensation to customer provision at financial year-end

Provision for compensation to customer (SOFP) 100,000.00

Compensation to customer provision (SOPL) 100,000.00
Reversal of provision for compensation to customer upon court decision

Compensation to customer (SOPL) 500,000.00

Compensation Payable (SOFP) 500,000.00
Compensation to customer according to court order

3 It is a non-adjusting event. As estimate of the financial effect.

4 It is an adjusting event . The loss due to the theft is to recognised. Dr Loss due to theft
(SOPL); Cr Loss due to theft (SOFP) for RM10,000
Journal entries Debit Credit
RM RM
Money stolen (SOPL) 10,000.00
Cash (SOFP) 10,000.00
Write off money stolen

5 It is an adjusting event . The loss due to bad debts of RM180,000 has to be recognised. Dr
Bad debts (SOPL); Cr Debtor (SOFP) for RM180,000
Journal entries Debit Credit
RM RM
Bad debts written off (SOPL) 180,000.00
Debtor (SOFP) 180,000.00
Bad debts written off