Questions:
Shortly after the reporting date, a major credit customer of Cheetah Inc. went into liquidation due to heavy trading losses. It is expected that little or none of the customer's $22,500 debt will be recoverable. $20,000 of the debt relates to sales made prior to the 2021 year-end, and $2,500 relates to sales made in the first two days of the 2022 financial year. In the 2021 financial statements, the whole debt has been written off. However, one of the directors suggests that the debt should not be written off but disclosed by note in Cheetah's 2021 financial statements, and the debt written off in the 2022 financial statements. 

First, which accounting standard would be applicable here?

How much of the debt should be written off in the 2021 financial statements?

Reference answers:
The relevant standard is IAS 10, which covers everts that occur between the financial period end and the date on which the financial statements are approved by the board of directors.

In this case, $20,000 of the receivable existed at the reporting date and the liquidation of the major customer provides more information about that receivable. This is an adjusting event that would require the debt existing at the reporting date to be written off in the 2021 financial statements. 

Therefore, $20,000 should be written off in the 2021 financial statements. The remaining receivable did not exist at the reporting date and should therefore be written off in the 2022 financial statements.