(a) A fire broke out on15th May, 2013, in which material worth 50 lakhs which was lying in inventory since 1st March, 2013 was totally destroyed. The financial statements of the company have not been adopted till the date of fire. The management of the company argues that since the loss occurred in the year, 2013-14, no provision for the loss needs to be made in the financial statements for 2012-13.
Yes dear its non adjusting event. no provision is required but check the materiality of the stock at FS level and if it is material enough to affect entity ability to continue as going concern prepare FS on realisable value basis, I think which would not be a case. in short provide appropriate disclosure in FS as a additional note if management permit. but no provision is required