Question

Given the following four subsequent events (unrelated) for the December 31, 2019 year-end:

1. On January 15, 2020, a major customer declared bankruptcy.
2. On January 25, 2020 a fire destroyed a major suppliers building that warehouses inventory .
3. On January 4^, 2020, an investment analyst downgraded the stock of the auditee.

            The audit report date is February 15, 2020.

Required:

      State clearly the type of subsequent event (Type I or Type II), if any, and the required impact on the financial statements.

Answer 1

Answer:

1. Major client opted for bankruptcy:

The organization has not given fiscal reports for the year. On the off chance that the organization has no sign that client will be bankrupt before the end of fiscal year, it is TYPE 2 resulting occasions. No impact ought to be given to the fiscal statements.The account receivables if any need not be given impact however a resulting event note ought to be given in audit report that event occurred. Since the client was significant it might impact the going conern of the entity. A note on going concern ought to likewise be given.

2. Fire destoryed a significant provider constructing that warehouses stock :

The event happened after the accounting report date and there is no sign of occasion on the balance sheet date. so It is TYPE 2 resulting event. No impact ought to be given in budget summaries or fiscal statements, yet to be unveiled in takes note of that event of same event and results of the equivalent.

3. A speculation/investment expert minimized the supply of auditee :

The event happened after the balance sheet date and there is no sign of event on the balance sheet date. so It is TYPE 2 resulting event. No impact ought to be given in fiscal reports, yet to be uncovered in takes note of that event of same event and results of the equivalent.