INTERNATIONAL

ACCOUNTING
STANDARD – 10 & 11
PRESENTED BY GROUP 4

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 OUR TEAM

Fahim Shahriar Fariha Tasnim Monorom Polok Md Nayem Uddin Ashik

B170203013 B170203062 B170203063 B170203096

Rohama Akter Shakila Afroz Farha Mahbuba Sultana

B170203097 B160203006 Shahin Farah
B160203115

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 Events
INTERNATIONAL after the
ACCOUNTING
STANDARD 10 Reporting
Period

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 INTRODUCTION

International Accounting Standards (IAS) is older

accounting standards issued by the International
Accounting Standards Board (IASB), an independent
international standard-setting body based in London.
The IAS was replaced in 2001 by International
Financial Reporting Standards (IFRS). The title of IAS
10 was modified many times.

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 EFECTIVE DATE

An entity shall apply this

Standard for annual periods
beginning on or after
1 January 2005.

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 EVENTS AFTER THE REPORTING PERIOD

End of reporting Closing works Board of directors Shareholders’

period finished authorizes for issue approval

December 31, January 31, February 15, February 28,

2019 2020 2020 2020

Events after the

reporting period

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OBJECTIVES
IAS 10 to prescribe:

● When an entity should adjust its financial

statements for events after the reporting period;
and

● The disclosures that an entity should give about

the date when the financial statements were
authorized for issue and about events after the
reporting period

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Authorizing the financial statements for issue

It varies depending upon the management structure and

procedures followed in preparing and finalizing the financial
statements.

• In case of approval by the shareholders, the financial statements

are authorized for issue on the date of issue.
• In case of approval by the supervisory board, the financial
statements are authorized for issue on the date when the
management authorizes them for issue to the supervisory board.

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 Types of events after the
reporting period
Events after the reporting period are
those events, favorable and unfavorable,
that occur between the end of the
reporting period and the date when the
financial statements are authorized for
issue. The two types of events are:

● Adjusting events

● Non-adjusting events

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ADJUSTING EVENTS AFTER THE
REPORTING PERIOD

Adjusting events are those events that provide

evidence of conditions that existed at the end of
the reporting period. An entity adjusts the
amounts recognized in its financial statements to
reflect adjusting events.

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RECOGNITION AND MEASUREMENT

Examples of adjusting events after the reporting period

• Court case: The entity might have a present obligation of a

court case at the end of the reporting period. If settlement of
that case occurs after the reporting period, the entity will
adjust any previously recognized provision related to this case
in accordance with IAS 37.

• Impaired asset: If there is any proof of low market value of

asset than the value recorded in the balance sheet at the end
of the reporting period, the amount will be adjusted. For
example: Bankruptcy of a customer, Sale of inventories.

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 RECOGNITION AND MEASUREMENT

• Assets purchase/sale: The determination after the reporting

period of the cost of assets purchased, or the proceeds from
assets sold before the end of the reporting period.

• Profit sharing: The determination after the reporting period

of the amount of profit-sharing or bonus payments, if the
entity has legal obligations.

• Fraudulent: The discovery of fraud or errors that show that

the financial statements are incorrect.

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NON-ADJUSTING EVENTS AFTER
THE REPORTING PERIOD
Non-adjusting events are those events
which are indicative of conditions that arose
after the reporting period. An entity does
not adjust the amounts recognized in its
financial statements to reflect non-adjusting
events.

If the event is material, it has to be

disclosed.

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Examples of non-adjusting events after the
reporting period

01 a major business
the destruction of a
major production
04
combination
plant by a Fire

02 announcing a plan to
discontinue an
announcing, or 05
commencing a major
operation restructuring

03 major purchases of
assets, classification changes in tax rates
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of asset under IFRS 5 or tax laws

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DIVIDENDS
If dividends are declared after
the reporting period but before
the financial statements are
authorized for issue, the
dividends are not recognized as
a liability at the end of the
reporting period because no
obligation exists at that time

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 GOING CONCERN
If a management indicates after the end of
the reporting period that it intends to
liquidate the business or cease trading or
there is no other realistic alternative, then the
financial statements should NOT be
prepared under going concern basis.

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DISCLOSURE

Non-adjusting events should be disclosed if they are

of such importance that non-disclosure would affect
the ability of users to make proper evaluations and
decisions. The required disclosure is

(a) the nature of the event and

(b) an estimate of its financial effect or a statement

that a reasonable estimate of the effect cannot be
made

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DISCLOSURE
• A company should update disclosures that relate to
conditions that existed at the end of the reporting
period to reflect any new information that it
receives after the reporting period about those
conditions.

• Companies must disclose the date when the

financial statements were authorized for issue and
who gave that authorization. If the enterprise's
owners or others have the power to amend the
financial statements after issuance, the enterprise
must disclose that fact

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INTERNATIONAL Construction
ACCOUNTING
STANDARD 11 Contracts

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OVERVIEW

IAS 11 Construction Contracts

provides requirements on the
allocation of contract revenue and
contract costs to accounting periods
in which construction work is
performed.

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 IS OUTCOME OF CONTRACT RELIABLY MEASURED?

YES NO

PROFIT LOSS UNCERTAIN

Recognize cost & Recognize cost & revenue on the Costs should be recognized when
revenue on the basis of stage of completion method incurred
basis of stage of
completion method
Entire loss should be recognized Revenue should be recognized to the
immediately in the income extent of costs considered to be
statement recoverable

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EFECTIVE DATE
Applicable for periods
beginning on or after
1 January 1995.

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 OBJECTIVE
IAS 11 to prescribe:

The accounting treatment of revenue and costs

associated with construction contracts

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What is a construction contract?

Construction contract is a contract

specifically negotiated for the construction
of an asset or a group of interrelated assets

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FIXED PRICE CONTRACT

A construction contract in which the contractor

agrees to a fixed contract price, or a fixed rate per
unit of output, which in some cases is subject to
cost escalation clauses

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COST PLUS CONTRACT

A construction contract in which the contractor

is reimbursed for allowable or otherwise
defined costs, plus a percentage of these
costs or a fixed fee.

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IAS 11 describes:
Situation 01: if a contract covers two or more
assets, the construction of each asset should be
accounted for separately if-

● separate proposals were submitted for each

asset

● portions of the contract relating to each asset

were negotiated separately, and

● costs and revenues of each asset can be

measured

Otherwise, the contract should be accounted for

in its entirety.

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IAS 11 describes:
Situation 02: Two or more contracts should be accounted
for as a single contract if they were negotiated together and
the work is interrelated

Situation 03: If a contract gives the customer an option to

order one or more additional assets, construction of each
additional asset should be accounted for as a separate
contract if either

(a) the additional asset differs significantly from the original

asset(s) or

(b) the price of the additional asset is separately negotiated

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CONTRACT REVENUE AND COST

Contract Revenue:
The amount agreed in the initial
contract

+ Revenue from alternations in the

original contract work

+ Claims and incentive payments that

(a) are expected to be collected and
(b) that can be measured reliably

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CONTRACT REVENUE AND COST

Contract Cost:
Costs that relate directly to the specific
contract

+ Costs that are attributable to the

contractor's general contracting activity to
the extent that they can be reasonably
allocated to the contract

+ Such other costs that can be specifically

charged to the customer under the terms of
the contract

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PERCENTAGE OF COMPLETION METHOD OF ACCOUNTING
If the outcome of a construction contract can be
estimated reliably, revenue and costs should be
recognized in proportion to the stage of completion of
contract activity.
To be able to estimate the outcome of a contract
reliably,
1. the entity must be able to make a reliable estimate
of total contract revenue,
2. the stage of completion, and
3. the costs to complete the contract
# If the outcome cannot be estimated reliably, no profit
should be recognized.

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WAYS OF DETERMINATION OF
COMPLETION OF A CONTRACT

• the proportion that contract costs incurred for

work performed to date bear to the estimated
total contract costs,
• surveys of work performed, or
• completion of a physical proportion of the
contract work

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An expected loss on a construction contract
should be recognized as an expense as soon as
such loss is probable

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DISCLOSURE
• amount of contract revenue recognized;

• method used to determine revenue;

• method used to determine stage of

completion; [IAS 11.39(c)] and

• for contracts in progress at balance sheet

date:
o aggregate costs incurred and
o recognized profit amount of advances
received
o amount of retentions
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THANKS!
Do you have any questions?

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