[messerv]

Regards to Adjusting/Non-adjusting events- If a debtor/receivable that was outstanding at year end but was written off postyearend due to sudden conditions that were not present at the Financial reporting date, would this be reflected in the balance sheet?


For example, before signing of the financial statements, one of your clients major warehouses burns down Post year end ,and now the balance that they owe you is doubtful. Do you make a provision on the accounts even though there was not evidence that the fire would occur at reporting date? Or do you just disclose this on the FS in a note (if material)

[paraclete]

If an event is known after balance date to be likely to affect the valuation of an assets then if it is parctical and material an adjustment should be made. In the circumstances given you don't know the client will default, it is reasonable to expect they will be adequately insured, as to goods, property and loss of business, however it is prudent to make a provision.