If an Adjusting Event That Occurs After Reporting Date Is

question 55

Multiple Choice

If an adjusting event that occurs after reporting date is considered to be immaterial AASB 110 requires that the entity:

• A) must disclose the nature of the event and a statement that an estimate of the financial effects cannot be made.
• B) must recognise the event at balance date.
• C) need not recognise nor disclose the event.
• D) must recognise the event at balance date and need not recognise nor disclose the event.

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Definitions:

Internal Rate

This term is too broad without specific context, such as “Internal Rate of Return (IRR).” Assuming IRR, it is a financial metric used to estimate the profitability of potential investments.

Present Value

The today's value of a forthcoming sum of money or cash flow sequence, determined by a specific rate of return.

Net Present Value Method

A method used in capital budgeting to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period.

Annual Return

The annual return is the percentage change in an investment's value over a year, accounting for dividends, interest, and capital gains.