Banksia Ltd Is in the Process of Completing Its Financial

question 5

Multiple Choice

Banksia Ltd is in the process of completing its financial reports for the period ended 30 June 2009 when it becomes public knowledge that company income tax rates are to be increased and that the increase is to apply retrospectively to the financial year just completed.AASB 110 requires what treatment for this item?

• A) No disclosure is required because the information is publicly available.
• B) The potential effect on the accounts should be disclosed in the notes to the financial statements.
• C) If material, the financial statements should be adjusted to reflect the impact of the event.
• D) An adjustment to the income statement should be made, but only note disclosure for the balance sheet since it is prepared as at the reporting date.
• E) None of the given answers.

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Definitions:

Hot Dog

A cooked sausage, traditionally grilled or steamed and served in a sliced bun as a sandwich.

Duty of Care

Legal obligation to act with a level of caution and attention to prevent harm to others.

Standard of Care

The degree of prudence and caution required of an individual who is under a duty of care, often used in legal contexts to assess negligence.

Volenti Non Fit Injuria

Voluntary assumption of the risk of injury.