earthquake destroyed a major warehouse of ACC Limited on 2o 5 2009 the accounting year of the company ended on 31st March 2009 the accounts were approved on 30th July 2009 the loss from earthquake is estimated at 30 lacs state with reason whether the loss due to earthquake is an adjusting or non existing event and how the effect of losses to be disclosed by the company???
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I think the answer should be it is it is affecting the going concern concept so that we should disclosed in this in this in the board directors report and it should be adjusted in the financial year 2008 -9
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Accounting standards
Replies (1)
Two ways to do this:-
Non adjusting event: disclose nature of accident; amount of loss; impact on taxation (no financial statement adjustments required)
Going concern: if the company is going to be liquidated or shutdown due to this, Financial statements should not be prepared on a going concern basis, but should do realisation/liquidation accounting as this non adjusting event had shut down the company.
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