You are the auditor of ABC Company and the audit process is almost done. The audit report is due to be signed next week. Thus, the following additional information on two material events has been presented to you. The company's year end was on 30 June 2012.
Event 1 - Occurred on 10 July 2012
The new products scheduled to be marketed in August 2012 have been found to be unsafe for use. The company evaluated that the value of inventory of RM250,000 has to be revalued at RM100,000.
Event 2 - Occurred on 5 August 2012
Production of the company's factory was stopped for one day due to the machine breakdown.
a) Justify whether the events are non- adjusting or adjusting events according to ISA 10 Events after the Reporting Period.
i. State whether Event 1 is adjusting or non-adjusting event. Describe why you say so.
ii. State whether Event 2 is adjusting or non-adjusting event. Describe why you say so.