12/17/20 1

TOPIC 6 (Part 3)
MFRS 110

Events after the Reporting

Period
12/17/20 2

Learning Objectives
1. To identify the events after the reporting
period that could affect the statement of
financial position.
2. Examine key implications of events after
the reporting period.
3. Specify accounting treatment for events
after the reporting period.
4. Prepare the appropriate disclosure in
Statement of Financial Position.
12/17/20 3

Event after the Reporting Period

MFRS 110.3
Any event occur between the end of the accounting period
and the date when the FS are authorized for issue.

Financial year 2014

1/1/2014 31/12/2014 1/4/2015 30/6/2015

SFP date @ BOD FS made
2 types of events; reporting authorize FS available
date for issue to public
 Adjusting events
 Non-adjusting events
12/17/20 4

Adjusting events

 Those that provide evidence of conditions that

existed AT the end of the reporting period; and

 Require adjustment to the amounts that had been

recognised in the FS before they are issued.

 The information provided by these events would have

been recorded as if it had been available at the end
of the reporting period.
12/17/20 5

Examples of adjusting events

1. Confirmation of court case
1. E.g. The settlement after the BS date of a court case that
confirms the entity had a present obligation at the end of the
reporting period.
2. Confirmation of impairment of assets
1. E.g. Bankruptcy of customers (A/Receivable) after the
reporting period
2. E.g. Impairment of inventories- NRV < cost
3. Determination of acquisition and disposal of assets
before the end of the reporting period.
4. Determination of profit-sharing or bonus payment,
given the obligation exist before the end of the
reporting period
5. Discovery of fraud or errors
12/17/20 6

Illustration 110.1
Assuming ABC Bhd had Account Receivables balance of
RM1,200,000 as at 31 Dec 2013. Among of its debtors is
XYZ Bhd, with a balance of RM500,000. As at the date, ABC
Bhd was of the opinion that the debt was wholly collectible
and, therefore, did not make any provision for doubtful debt.
However, on Jan 2014, it was learnt that XYZ Bhd had been
placed under receivership (bankruptcy). Only 20% of the
amount due by XYZ is expected to be collectible upon
settlement of receivership process. The financial statement is
authorized to be issued on 31 March 2014.

REQUIRED: Identify whether the above event affect the financial

position of the company on the balance sheet date. State the
appropriate treatment on this event.
12/17/20 7

This event was a post BS event (occurring between the BS

date of 31 Dec 2013 & date of issuance of 31 March
2014).

For one to be put under receivership, one would have been

in financial difficulty for the past 6 months. This post BS
event provided additional evidence of conditions that had
existed at the BS date (collectibility of the debtor) and
therefore was an adjusting post BS event.

Adjusting entry is required to adjust for the above event:

Dr. Bad debt expense 400,000
Cr. Provision for doubtful debt 400,000
(500,000 x 80%)
Therefore, Balance in Account Receivable (after
adjustment)
= RM1,200,000 – RM400,000 = RM800,000
12/17/20 8

Non-adjusting events

 Those that are indicative of conditions

that arose AFTER the reporting
period.
 Require disclosure in, but not
adjustment
 These events provide evidence about
conditions that did not exist at the
balance sheet date.
12/17/20 9

Examples of non-adjusting
events
1. Destruction of plant due to disasters such as fire,
flood.
2. A major business combination after the BS date or
disposing of a major subsidiary.
3. Announcing a plan to discontinue an operation.
4. Major purchases and disposals of assets.
5. An abnormal decline in market value of investments.
6. Entering into significant commitment or contingent
liabilities.
12/17/20 10

Illustration 110.2
Assuming ABC Bhd is preparing its financial
statement on 31 Dec 2014, which has been
approved for issuance on 31 March 2015. On 1
March 2015, the company disposed of its land
and enjoyed a significant gain of RM250,000.

REQUIRED: Identify whether the above event

affect the financial position of the company on the
reporting date. State the appropriate treatment on
this event.
12/17/20 11

This event was a post reporting period event (occurring

between the reporting date of 31 Dec 2014 & date of
issuance of 31 March 2015).

The gain from disposal of land is realized after the end of

the reporting period. There is no evidence showing that
the event had existed at the end of the reporting period.
Therefore, it does not affect the SFP and it is considered
as a non-adjusting event.

No adjusting entry is required for this non-adjusting end

of the reporting period event, but it shall be disclosed in
the Notes to the Account of the 2014 financial
statement.
12/17/20 12

Other issues…

1. Dividends
 Dividend declared to holders of equity instruments after the
end of the reporting period, is not a liability at the reporting
date.
 Reasons – do not meet the criteria of a present obligation
in MFRS 137.
 Just disclosed in the notes to the FS in accordance with
MFRS 101.
2. Going concern status
 Intention to liquidate the entity or to cease trading after the
BS date caused going concern assumption used in
preparing the FS may no longer be appropriate.
12/17/20 13

Disclosures of Events After the

Reporting Period

1. The following disclosures should be provided as well:

 The nature of the events, and
 The estimate of the financial effect, or a statement
that such an estimate cannot be made.

2. Change basis of accounting and disclosed in the notes

to the FS accordance with MFRS 101.
12/17/20 14

Other disclosures
1. Date of authorization for issue
 The date when the FS were authorized for issue and who
gave that authorization.
 If the entity’s owners or others have the power to amend the
FS after issue, the entity shall disclose that fact.

2. Updating disclosure about conditions at the reporting date

 The information received after the end of the reporting period
about condition that existed at the reporting date.
 Need to be disclosed even if it does not affect the amounts
recognized in the FS.