Prior to the Finalisation of the Financial Statements for the Year

question 23

Multiple Choice

Prior to the finalisation of the financial statements for the year ended 30 June 20X2,a company experienced a number of material events,including:
I on 10 July 20X2,the directors decided to close a division of the company at an estimated cost of $1 000 000.
II on 10 August 20X2,a court decision found the company liable to pay damages of $500 000 to a major customer who had commenced legal action in April 20X0.
III an independent valuation of Property,conducted on 20 July 20X2 revealed that the directors' valuation included in the 30 June 20X2 financial statements was overstated by $700 000.
In respect of the events listed above,it will be necessary to adjust the financial statements,by way of general journal entries,for:

• A)I,II and III;
• B)II only,and make a note disclosure for I and III;
• C)III only,and make a note disclosure for I and II;
• D)II and III only,and make a note disclosure for I.

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