CERTYNEX IFRS ACADEMY

Draurgane adjusts its accounts for the sudden fall, one month after the reporting date, in demand for a product, on the ground that the event is known before authorisation. Sales of this product were normal up to the reporting date. What is the error?

The event should have been ignored because it is unfavourable.

There is no error: every event known to management before the accounts are authorised must be adjusted at the reporting date.

Knowing of it before authorisation is not enough: the fall indicates a condition that arose after the reporting date.

The adjustment should have been taken to equity.