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Events after
the Reporting
Period
Philippine Accounting Standards (PAS) 10

Learning Objectives

• Define events after the reporting period.

• State the accounting requirements for events after the reporting
period.

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Objective and Scope

PAS 10 prescribes the accounting for, and disclosures of,

events after the reporting period, including disclosures
regarding the date when the financial statements were
authorized for issue.

Events after the Reporting

Period
Events after the reporting period are “those events,
favorable or unfavorable, that occur between the end of
the reporting period and the date that the financial
statements are authorized for issue.” (PAS 10.3)

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Date of authorization of the

financial statements
This date is the date when management authorizes
the financial statements for issue regardless of whether
such authorization for issue is for further approval or for
final issuance to users.

Events after the Reporting

Period - Illustration
Entity A’s reporting period ends on December 31, 2021
and its financial statements are authorized for issued on
March 31, 2022.

Events after the reporting period are those events that

occur within the January 1, 2022 to March 31, 2022.

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Two types of events after the

reporting period
• Adjusting events after the reporting period
– are those that provide evidence of conditions that existed at
the end of the reporting period. (requires adjustments of
amounts)

• Non-adjusting events after the reporting period

– those that are indicative of conditions that arose after the
reporting period. (disclosure only)
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Examples of adjusting events:

• The settlement after the reporting period of a court case that confirms that the
entity has a present obligation at the end of reporting period.

• The receipt of information after the reporting period indicating that an asset was
impaired at the end of reporting period. For example:
I. The bankruptcy of a customer that occurs after the reporting period may indicate that the
carrying amount of a trade receivable at the end of reporting period is impaired.
II. The sale of inventories after the reporting period may give evidence to their net realizable
value at the end of reporting period

• 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 discovery of fraud or errors that indicate that the financial statements are
incorrect. 9

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Adjusting events - Illustration

Entity A’s inventories on December 31, 2020 have a cost

of Php100,000 and a net realizable value of Php80,000.
Shortly after December 31, 2020, but before the financial
statements were authorized for issue, the inventories
were sold for a net sale proceeds of Php70,000.

Requirement: How much is the correct valuation of

Entity A’s inventories in the December 31, 2020 financial
statements?
Php70,000 10

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Adjusting events - Illustration

Entity A recognized a provision for a pending litigation

amounting to Php50,000 on December 31, 2020 (end of
current reporting period). This amount is reflected in
Entity A’s reported profit of Php600,000 for the year
2020. Shortly after December 31, 2020, but before the
financial statements were authorized for issue, the
litigation is settled for Php40,000.

Requirement: How much should be the profit in 2020?

Php610,000 11

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Adjusting events - Illustration

Entity A recognized a provision for a pending litigation amounting to

Php50,000 on December 31, 2020 (end of current reporting period). This
amount is reflected in Entity A’s reported profit of Php600,000 for the year
2020. Shortly after December 31, 2020, but before the financial statements
were authorized for issue, the litigation is settled for Php40,000.

Requirement: How much should be the profit in 2020?

Unadjusted Profit Php 600,000
Add/(Deduct): Adjustments
Provision for litigation Php50,000 Expense is
Actual litigation cost 40,000 10,000 overstated
PROFIT TO BE REPORTED Php610,000
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Examples of non-adjusting
events
• Changes in fair values, foreign exchange rates, interest rates or market
prices after the reporting period.
• Casualty losses (e.g., fire, storm, or earthquake) occurring after the
reporting period but before the financial statements were authorized for
issue.
• Litigation arising solely from events occurring after the reporting
period.
• Major ordinary share transactions and potential ordinary share
transactions after the reporting period.
• Major business combination after the reporting period.
• Announcing a plan to discontinue an operation after the reporting
period.
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• Declaration of dividends after the reporting period
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Dividends

Dividends declared after the reporting period are not

recognized as liability at the end of the reporting period

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Going Concern

PAS 10 prohibits the preparation of financial

statements on a going concern basis if the management
determines after the reporting period either that it
intends to liquidate the entity or to cease trading, or that
it has no realistic alternative but to do so.

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Disclosures

• Date of authorization for issue

• Adjusting events
• Material Non-adjusting events

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