Question:
The management of NewTech Ltd completed draft financial statements for the year ended 30 June 2015 on 20 August 2015.
On 1 September 2015, the board of directors reviewed the financial statements and authorized them for issue. The company announced its profit and selected other financial information on 7 September 2015.
The financial statements were made available to shareholders and others on 14 September 2015. The shareholders approved the financial statements at their annual meeting on 29 September 2015 and the approved financial statements were then filed with ASIC on 30 September 2015.
The following are events occurred after the end of reporting period ended 30 June 2015. Assuming that all amounts are material.
1. Due to a significant change in the foreign exchange rate on 7 July 2015, the value of NewTech's account receivables dropped by $650,000
2. The Commonwealth Treasurer announced a 3% decrease in corporate tax rates on 13 July 2015. NewTech Ltd had $500,000 deferred tax liabilities recognized in accordance with AASB 112.
3. The directors of NewTech Ltd declared a 10-cent dividend on ordinary shares on 20 July 2015. It amounted to $320,000.
4. NewTech Ltd purchased equipment on 26 June 2015 for $100,000. A routine check by the external auditor on 12 August 2015, revealed that the equipment had been incorrectly recorded at $10,000 due to a computer system error.
5. On 24 August 2015, the following judgement was handed down in the Supreme Court of NSW, which the defendant (NewTech Ltd) pays $300,000 to Coolbay Ltd for failure to perform under the terms of the supply contract.
6. One of NewTech's three warehouses was destroyed by fire on 31 August 2015. The estimate of damage is $850,000.
7. At a directors' meeting held in May 2015 it was decided that, in early September 2015, the Victoria operations of the company would be closed. The estimated costs of closure ($2.1 million) were recorded as a provision. On 15 September 2015, the actual costs incurred in closing became available, which was $2.5 million.
Requirements
1. Explain how these events would be accounted for and disclosed in accordance with the requirements of AASB 110.
2. Refer to the relevant paragraph of AASB 110 for the answer to each event.