Yandalup Ltd Has a Series of Outback Cattle Stations

question 77

Multiple Choice

Yandalup Ltd has a series of outback cattle stations.Subsequent to reporting date it is discovered that flooding before reporting date has destroyed several farm buildings,equipment and some stock.The loss is material in size.How should this event be reported according to AASB 110?

• A) No disclosure is required.
• B) The event's financial effect should be recognised in the financial statements for the period.
• C) The event's effect on the entity should be included in note disclosure.
• D) Disclosure of the event in the Directors' Declaration is required.

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Diseconomies of Scale

A phenomenon where a company's production costs increase due to an expansion in output, leading to inefficiencies.

Fixed Costs

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance.

Diseconomies of Scale

The phenomenon where production cost per unit increases as the scale of output increases, usually due to factors like increased complexity and inefficiencies.