Events After Reporting Period IAS 10 Flashcards
What are Adjusting Events
Those events that provide further evidence of conditions existed AT REPORTING DATE
an entity should adjust amounts in the financial statements to reflect adjusting events
What are Non-Adjusting Events
Those events that are indicative of conditions that arose AFTER THE REPORTING DATE
if the events are considered material, then a disclosure should be made on:
-the nature of the event
-an estimate of its financial effect
A disclosure should be made because a non-disclosure would affect the ability of the users of the financial statements to make proper evaluations and decisions
Examples of Adjusting Events
Settlement of a court case (Provision value).
* Sale of inventories (NRV considerations).
* Bankruptcy of customer (Bad Debt provision)
* Amounts of profit sharing / bonus payment.
Examples of Non Adjusting Events
- A major business combination or disposal of subsidiary.
- announcement of a plan to discontinue an operation.
- destruction of major plant by fire.
- announcing or implementing a major restructuring.
- major ordinary share transactions.
- abnormal changes in exchange rates.
- commencing major litigation in respect of events occurring after the reporting period
How are Dividends treated
If dividends to holders of equity instruments are declared AFTER the reporting period, an enterprise should not recognise those dividends as a liability at the reporting date
Such dividends should be disclosed in the financial statements
How is Going Concern treated
If the entity’s ability to continue as a going concern is affected by an event after the reporting date, the financial statements must be restated accordingly
What are events after the reporting period
Those events (favourable/unfavourable) which occur between the reporting date (year end) and the date of which the statements are authorized for issue
