If It Becomes Known After Reporting Date That a Debtor

question 14

Multiple Choice

If it becomes known after reporting date that a debtor is now not able to pay a material amount that is owed to the reporting entity,the appropriate action according to AASB 110 is to:

• A) Adjust the balance of accounts receivable and write off the bad debt and make a note disclosure that this event occurred after reporting date.
• B) Adjust the balance of accounts receivable and write off the bad debt.
• C) Disclose the event in the notes to the accounts.
• D) Do nothing this period but write the debt off in the accounts for the next period.
• E) None of the given answers.

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Definitions:

Virtual Currency

Digital representations of value that function as a medium of exchange, a unit of account, and/or a store of value, but do not have legal tender status.

Financial Institutions

Organizations that conduct financial transactions such as investments, loans, and deposits. Common examples include banks, credit unions, and insurance companies.

Anonymously

Acting or producing something without revealing one's identity.

Federal Deposit Insurance Corporation

A U.S. government agency created to maintain stability and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions for safety, and managing receiverships.