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Question 1: If it becomes known after reporting date that a debtor is now not able to pay a material amount that is owed to the reporting entity, the appropriate action according to AASB 110 is to:
a. Adjust the balance of accounts receivable and write off the bad debt.
b. Adjust the balance of accounts receivable and write off the bad debt and make a note disclosure that this event occurred after reporting date.
c. Disclose the event in the notes to the accounts.
d. Do nothing this period but write the debt off in the accounts for the next period.
Financial Statement Analysis and Preparation
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