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of Directors of the company has reviewed the financial statements and authorized them for issueon 25 February 2020.DiscussionBalance sheet date = 31 December 2019Authorisation date = 25 February 2020Event date = 18 January 2020Therefore, the decision by the court should be considered as an event after reportingperiod because it occurs between the balance sheet date and authorization date.This event is also an adjusting event, because this decision by the court case providesadditional evidence about item (the pending court case) that already existed at the balancesheet date.On 31 December 2019 (balance sheet date), the company has already included theestimated amount of the court case loss, RM 12,000,000 in its journal entry, whereby:31 Dec 2019Lawsuit LossRM 12,000,000Provision for Lawsuit LossRM 12,000,000(To record the amount of contingent liability from pending court case with CDE Berhad.)Therefore, this RM 12,000,000 has already existed as a contingent liability in thefinancial statements on 31 December 2019.On 18 January 2020, the court decided the amount of RM 20,000,000 on the court caseloss.Therefore, this decision by the court is an adjusting event after reporting period as itprovides additional information on the contingent liability which has already existed inthe financial statements of the company on 31 December 2019.
Since this is an adjusting event, adjustment journal entry should be provided on 18January 2020 to adjust the additional amount of RM 8,000,000 (RM 20,000,000RM12,000,000) on this court case loss.Additional disclosure should also be updated to reflect this adjusting event after thereporting period.In the disclosure, additional information on the decision of the court should be provided.Journal entry (Adjustment)18 Jan 2020Lawsuit LossRM 8,000,000Provision for Lawsuit LossRM 8,000,000(To record the additional amount of court case loss from court case with CDE Berhad as decidedby the court.)DisclosureSubsequent to the balance sheet date (31 December 2019), on 18 January 2020, court has decidedABC Berhad lose the court case with CDE Berhad and the amount of court case is RM 20,000,000.Since RM 12,000,000 has already been accrued as contingent liability in financial statements on31 December 2019, therefore, an additional RM 8,000,000 need to be adjusted and accrued in thefinancial statements of 2019.Non-adjusting eventsNon-adjusting events are the events that provide information or evidence about items thatdid not exist at the financial statements date.Therefore, it has no impact on the valuations as reported in the preceding year financialstatement.However, non-adjusting events may have significant impact upon the future operation ofthe entity.MFRS 110 states that for non-adjusting events, no adjustment journal entry is required,but disclosure about the event should be provided.Example of non-adjusting event:Financial statements of 2019 were issued at 31 December 2019. ABC Company has a van withhistorical cost RM 4,000,000 and accumulated depreciation of RM 2,500,000. ABC Company

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