9.1 IAS 10 Events After Reporting Date

Question 1

What are events after the reporting date

Answer 1

• Anything that occurs between the reporting date of the FS and the date it is approved by the board of directors
• There is a lag as time is needed to consolidate the accounts

Question 2

What are the types of events after the reporting date

Answer 2

1. Adjusting events
2. Non adjusting events

Question 3

What are adjusting events

Answer 3

Events after the reporting date which provide additional evidence of conditions existing at the reporting date

Question 4

What are non adjusting events

Answer 4

• Events after the reporting date which concern conditions arising after the reporting date
• Disclose as a note to the FS if it is of such importance to affect judgements

Question 5

How do you account for adjusting events

Answer 5

Adjusting events require the adjustment of amounts recognised in the financial statements.

Question 6

How do you accounting for non adjusting events

Answer 6

Non-adjusting events should be disclosed by note if they are of such importance that non-disclosure would affect the ability of the users of the financial statements to make proper evaluations and decisions.

Question 7

How are going concern issues presented is they arise after the reporting date

Answer 7

If an event after the reporting date suggests that the entity is not a going concern, the SFP should be prepared on a break-up basis

Question 8

Are proposed dividends an adjusting event

Answer 8

• Equity dividends proposed before but approved and paid after the reporting date may not be included as liabilities (accrued) at the reporting date.
  o As directors have no obligation to pay what they proposed
• Dividends are accounted for on a cash basis so they are non-adjusting events after the reporting date and must be disclosed by note as required by IAS 1.
• This basically means that proposed dividends are not accrued for in the FS, because these is no legal obligation at y/e

Question 9

What is considered material enough to be an adjusting event

Answer 9

IAS 10 does not specifically state that the financial statements should be adjusted to reflect only material adjusting events, but this is implied by the materiality principle established in the IASB Conceptual Framework.