(a) The objective of IAS 10 Events after the Reporting Period is to prescribe the treatment of events that occur after an entity’s reporting period has ended. Required: Define the period to which IAS 10 relates and distinguish between adjusting and non-adjusting events. (5 marks) (b) Waxwork’s current year end is 31 March 2009. Its financial statements were authorised for issue by its directors on 6 May 2009 and the AGM (annual general meeting) will be held on 3 June 2009. The following matters have been brought to your attention: (i) On 12 April 2009 a fire completely destroyed the company’s largest warehouse and the inventory it contained. The carrying amounts of the warehouse and the inventory were $10 million and $6 million respectively. It appears that the company has not updated the value of its insurance cover and only expects to be able to recover a maximum of $9 million from its insurers. Waxwork’s trading operations have been severely disrupted since the fire and it expects large trading losses for some time to come. (4 marks) (ii) A single class of inventory held at another warehouse was valued at its cost of $460,000 at 31 March 2009. In April 2009 70% of this inventory was sold for $280,000 on which Waxworks’ sales staff earned a commission of 15% of the selling price. (3 marks) (iii) On 18 May 2009 the government announced tax changes which have the effect of increasing Waxwork’s deferred tax liability by $650,000 as at 31 March 2009. (3 marks) Required: Explain the required treatment of the items (i) to (iii) by Waxwork in its financial statements for the year ended 31 March 2009. Note: assume all items are material and are independent of each other. (10 marks as indicated)