a major fire has damaged assets in a factory of ex Company Limited on 8 April 2004 8 days after the year and closing of accounts the loss is estimated to be 16 hours after estimating the recoverable amount of 24 hours from the insurance company if the company had no insurance cover the loss due to fire would be 40 crores explain how the Lost should be treated in the final accounts of 2004?..
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as per me the fire is a sudden event it is an event occurring after balance sheet date and it is in non adjusting event just because there is no further evidence of any fire and all so we should not treat this in balance sheet but this major fire damaged acids in factory adress would affect the going concern concept so we should disclose this in directors report and we should adjust this in the financial statements of the year 2004 and I think this is the same if there is no insurance or if there is insurance the same treatment will be held.
correct me if I'm wrong
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Accounting standards
Replies (1)
This is a non adjusting event. Since financial statements are already issued, Insurance, asset loss impairment should be disclosed. The insurance part is bit unclear in the question though.
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