FAC3701 ASSIGNMENT 2 Due 02 APRIL 2025
IF YOU NEED COMPLETE ANSWERS WHATSAPP +27711475714
, a)
USE OEN MEMO FORMAT
As requested, below are the three characteristics required to ensure faithful representation of
Valley Ltd’s financial statements, as per the Conceptual Framework for Financial Reporting:
Completeness
Neutrality
Free from Error
b)
The competitor’s price reduction was announced on 25 June 2024, but Valley Ltd’s response (price
cut) occurred on 1 July 2024. The event is an event after the reporting period as it occurred after 30
June 2024.
The competitor’s price reduction is an adjusting event as it affects the net realisable value of
inventory of Valley Ltd on 30 June 2024 and indicates the market conditions at that date
The adjusting journal entry will be as follows:
DR CR
Cost of sales (P/L) 27 000
Inventory (SFP) (80 000 – 53 000) 27 000
The inventory with a cost price of R162 000 was stolen from Valley Ltd’s warehouse on 5 July 2024.
The event is an event after the reporting period as it occurred after 30 June 2024.
the theft of inventory did not exist at year end (on 30 June 2024)therefore they are both non-
adjusting events.
No adjustment will be made in the financial statements for the year ended 30 June 2024 but the
theft of the inventory may be disclosed as an events after the reporting period as the value of
inventory may affect the decisions of users of the financial statements.
IF YOU NEED COMPLETE ANSWERS WHATSAPP +27711475714
, a)
USE OEN MEMO FORMAT
As requested, below are the three characteristics required to ensure faithful representation of
Valley Ltd’s financial statements, as per the Conceptual Framework for Financial Reporting:
Completeness
Neutrality
Free from Error
b)
The competitor’s price reduction was announced on 25 June 2024, but Valley Ltd’s response (price
cut) occurred on 1 July 2024. The event is an event after the reporting period as it occurred after 30
June 2024.
The competitor’s price reduction is an adjusting event as it affects the net realisable value of
inventory of Valley Ltd on 30 June 2024 and indicates the market conditions at that date
The adjusting journal entry will be as follows:
DR CR
Cost of sales (P/L) 27 000
Inventory (SFP) (80 000 – 53 000) 27 000
The inventory with a cost price of R162 000 was stolen from Valley Ltd’s warehouse on 5 July 2024.
The event is an event after the reporting period as it occurred after 30 June 2024.
the theft of inventory did not exist at year end (on 30 June 2024)therefore they are both non-
adjusting events.
No adjustment will be made in the financial statements for the year ended 30 June 2024 but the
theft of the inventory may be disclosed as an events after the reporting period as the value of
inventory may affect the decisions of users of the financial statements.
