During January 20X2, before the financial statements of Rainbird Co for the year ended 31 December 20X1 had been finalised, a number of events took place.

Which of these events would require an adjustment to the financial statements as at 31 December 20X1 in accordance with IAS 10 Events After the Reporting Period?

Option A A legal case for which Rainbird Co had provided $1.7 million at 31 December 20X1 to cover possible damages was unexpectedly settled in its favour.

Option B One of Rainbird Co's warehouses was destroyed by fire and half of the inventory on hand at 31 December 20X1, valued at $2.5 million, was destroyed.