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(b) On 5 July 2021, an oil tanker owned by the company sank in heavy seas off the coast of northern NSW. The tanker was fully laden and has created an oil spill stretching for 140km along the northern NSW coastline. The tanker was included in the 30 June 2021 financial statements at a carrying amount of $15 million. The oil that the tanker was transporting was being carried in the financial statements at $2 million. An initial evaluation of the cost of the clean-up operation is estimated at $14 million. There is also a strong possibility that the oyster farmers will take legal action against the firm for stock losses and related damage to the oyster beds. The risk management team has assessed that the possible costs of litigation could reach $50 million. Enter your answer here (c) Having reviewed the draft financial statements as at 30 June 2021, the directors approved a dividend of $5 per share. There are currently five million outstanding ordinary shares. This dividend was declared on 30 September 2021. Enter your answer here (d) Ajudgement is handed down in the Victorian Supreme Court on 15 July 2021 in relation to a 2020 product liability case brought by a customer against the company. This judgement renders the company liable for court costs and compensation totalling $240 000. Enter your answer here 8 Points Required: 1. Please consider each of the following events that has been disclosed by the directors of Petrol Limited to decide whether they are adjusting or non-adjusting events and justify your choice. It is assumed that the information has come to light prior to the financial statements being authorised for issue and all events are material by reason of size and nature. (4 marks) 2. Based on your answer to requirement 1, prepare the necessary journal entries or note disclosures to comply with the requirements of AASB 110 Events after the Reporting Period. (4 marks) Below are the events after the reporting period: You are finalizing the 2021 financial statements of Petrol Ltd, a company involved in the mining, refining and retail distribution of petroleum products. As part of your final review, you have asked the CEO if there are any events that have arisen since the end of the financial year of which you should be made aware. The financial period ends on 30 June 2021. He has advised you of the following events: (a) On 30 August 2021, a meeting of OPEC agreed to increase the Saudi Arabian oil quota by 17 million barrels in 2021-2022. The immediate impact of this decision was to reduce the price of crude oil by $13 a barrel to $56 a barrel. As at 30 June 2021 Petrol Ltd had one million barrels of crude oil in stock at an average cost of $60 per barrel. Petrol Ltd values its crude oil at the lower of cost and net realisable value as per AASB 102. The price fluctuation is expected to be permanent given the change in attitude by the OPEC nations. Enter your answer here (b) On 5 July 2021, an oil tanker owned by the company sank in heavy seas off the coast of northern NSW. The tanker was fully laden and has created an oil spill stretching for 140km along the northern NSW coastline. The tanker was included in the 30 June 2021 financial statements at a carrying amount of $15 million. The oil that the tanker was transporting was being carried in the financial statements at $2 million. An initial evaluation of the cost of the clean-up operation is estimated at $14 million. There is also a strong possibility that the oyster farmers will take legal action against the firm for stock losses and related damage to the oyster beds. The risk management team has assessed that the possible costs of litigation could reach $50 million. Enter your answer here (c) Having reviewed the draft financial statements as at 30 June 2021, the directors approved a dividend of $5 per share. There are currently five million outstanding ordinary shares. This dividend was declared on 30 September 2021. Enter your answer here (d) Ajudgement is handed down in the Victorian Supreme Court on 15 July 2021 in relation to a 2020 product liability case brought by a customer against the company. This judgement renders the company liable for court costs and compensation totalling $240 000. Enter your answer here 8 Points Required: 1. Please consider each of the following events that has been disclosed by the directors of Petrol Limited to decide whether they are adjusting or non-adjusting events and justify your choice. It is assumed that the information has come to light prior to the financial statements being authorised for issue and all events are material by reason of size and nature. (4 marks) 2. Based on your answer to requirement 1, prepare the necessary journal entries or note disclosures to comply with the requirements of AASB 110 Events after the Reporting Period. (4 marks) Below are the events after the reporting period: You are finalizing the 2021 financial statements of Petrol Ltd, a company involved in the mining, refining and retail distribution of petroleum products. As part of your final review, you have asked the CEO if there are any events that have arisen since the end of the financial year of which you should be made aware. The financial period ends on 30 June 2021. He has advised you of the following events: (a) On 30 August 2021, a meeting of OPEC agreed to increase the Saudi Arabian oil quota by 17 million barrels in 2021-2022. The immediate impact of this decision was to reduce the price of crude oil by $13 a barrel to $56 a barrel. As at 30 June 2021 Petrol Ltd had one million barrels of crude oil in stock at an average cost of $60 per barrel. Petrol Ltd values its crude oil at the lower of cost and net realisable value as per AASB 102. The price fluctuation is expected to be permanent given the change in attitude by the OPEC nations. Enter your answer here

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