PAS 10 Events after the reporting period

Events after the reporting period are those events, whether favorable o unfavorable, that occurs between the
end of reporting period and the date on which the financial statements are authorized for issue. It also known as
subsequent events. Such events may require either adjustment or disclosure.

Types of events after the reporting period

 Adjusting events after the reporting period are those that provide evidence of conditions that exist at the
end of reporting period.
 Non-adjusting events after reporting period are those that are indicative of conditions that arise after the
end of reporting period.

Accordingly, an entity must adjust the amounts recognized in the financial statements for adjusting events
that provide evidence of conditions that existed at the end of reporting period.

However, an entity does not recognize events after the reporting period that relate to conditions that only
arose after the reporting period.

The entity is required only to disclosure significant non-adjusting events

Examples:
Adjusting Events
 Settlement after the reporting period of a court
case because it confirms that the entity already
had a present obligation at the end of the
reporting period.
 Bankruptcy of a customer which occurs after
the reporting period.
 Sale of inventories after the reporting period
may give evidence about the net realizable
value at reporting date.
 The determination after the reporting period of
the cost of asset purchased or the proceeds
from asset sold before the end of reporting
period.
 The determination after the reporting period of
the profit sharing or bonus payment if the
entity has the present obligation at the end of
reporting period to make such payment.
 The discovery of fraud or errors that show the
financial statements were incorrect.
Non-adjusting Events
 Business combination after the reporting period
 Plan to discontinue an operation
 Major purchase and disposal of asset or
expropriation of major asset by government
 Destruction of a major production plant by a fire
after the reporting period
 Announcing or commencing the implementation of
a major restructuring
 Abnormally large changes after the reporting
period in asset prices or foreign exchange rates
 Entering into significant commitments or
contingent liabilities, for example, by issuing
guarantees.
 Commencing major litigation arising solely from
events that occurred after the reporting period.
 Change in tax rate enacted or announced after the
end of reporting period that has a significant effect
on current and deferred tax asset and liability

Financial statements authorized for issue

 Financial statements are authorized for issue when the board of directors reviews the financial
statements and authorizes them issue,
 In some cases, an entity is required to submit the financial statements to the shareholders for approval
after the financial statements have been issued.
 In such cases, the financial statements are authorized for issue on the date of issue by the board of
directors and not on the date when shareholders approve the financial statements.