ICSAN Financial Accounting Practice Questions - ICSAN Professional Programme I - Financial Accounting Exam

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A major customer of Zenith Plc filed for bankruptcy on 15 January 2026 due to worsening financial difficulties that began in late 2025. Zenith Plc's reporting period ended on 31 December 2025, and its financial statements are authorized for issue on 28 February 2026. How should this event be treated under IAS 10?

As an adjusting event, write down the trade receivable balance at 31 December 2025 to its recoverable amount As a non-adjusting event, disclose the nature and financial effect of the bankruptcy in the notes As an adjusting event, recognize the entire receivable amount as a liability Do nothing, because the event occurred after the reporting period ended

Correct Answer:

As an adjusting event, write down the trade receivable balance at 31 December 2025 to its recoverable amount

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