IAS 10 – EVENTS AFTER REPORTING PERIOD

EVENTS AFTER THE RP:

Events, favorable & unfavorable, that occur between the end of the RP and the date when the FSs are authorized for issue.
Two types of events can be identified that:
a) provide evidence of conditions that existed at the end of the RP (adjusting events after the RP); and
b) are indicative of conditions that arose after the RP (non- adjusting events after the RP).

ADJUSTING EVENTS
a) Settlement of a court case after the RP that confirms that the entity had a present obligation at year end.
b) Receipt of information after RP indicating that an asset was impaired at year end or that the amount of a previously recognized
impairment loss for that asset needs to be adjusted. For example:
i. bankruptcy of a customer that occurs after RP usually confirms that the customer was credit-impaired at the end of the
reporting period; and
ii. Sale of inventories after the RP may give evidence about their NRV at the end of the RP.
c) Determination after the RP of the cost of assets purchased, or the proceeds from assets sold, before the end of the RP.
d) Determination after the RP of the amount of profit-sharing or bonus payments, if the entity had a present legal or constructive
obligation at year end to make such payments.
e) Discovery of fraud or errors that show that the financial statements are incorrect (fraud is always adjusting)
f) New product introduced by a competitor after RP causing a significant decline in the market demand of our products. This is an
adjusting event if entity reduces its prices.

NON-ADJUSTING EVENTS
Indicates conditions that arose after the year end. Accounting treatment is not to adjust the amounts recognized in financial statements.
However, the nature and financial effect (if can be made) of material non-adjusting events shall be disclosed. Also, consider if the impact
of such events cause doubt on the GC of the entity.
a) Decline in FV of investments between the end of the RP and the date when the financial statements are authorized for issue
b) Inability of a customer to pay debts after the RP due to a natural disaster
c) Change in tax rates after the RP
d) Change in foreign exchange rates
NAE THAT COULD POTENTIALLY REQUIRE DISCLOSURE
a) Dividend declared after the RP, the entity shall not recognize those dividends as a liability at Y-E but are disclosed in the notes
b) A major business combination after the reporting period or disposing of a major subsidiary;
c) Announcing a plan to discontinue an operation;
d) Major purchases of assets, disposals of assets, or expropriation of major assets by government;
e) Destruction of a major production plant by a fire after the reporting period;
f) Announcing, or commencing the implementation of, a major restructuring;
g) Major ordinary share transactions and potential ordinary share transactions after the reporting period;
h) Entering significant commitments or contingent liabilities, for example, by issuing significant guarantees; and
i) Commencing major litigation arising solely out of events that occurred after the reporting period.

Further, consider that whether a decline in carrying value of Assets is due to events before the RP or after. If after, then NAE but disclose
if material

DISCLOSURE: An entity shall disclose the following for each material category of non-adjusting event after the RP:
a) the nature of the event; and
b) an estimate of its financial effect, or a statement that such an estimate cannot be made