IAS 10 Events after the

reporting period
Presented by
Lamis ALhslabi
Jullanar Aldeeb
 INTRODUCTION
01 Background • Objective • Scope • Definitions

ADJUSTING EVENTS
02 Definition • Recognition issues • Measurement

03 NON-ADJUSTING
Examples

DISCLOSURE EVENTS+ OTHER ISSUES

04 EXAMPLES
 The problem and Objective of IAS 10
1. Usually, a period of time
elapses between the balance
sheet date and the date on
which the financial
statements are authorized for
issue
Objective of IAS 10 🡪 describes:
1. When financial statements should be adjusted for events after the
reporting period
2. The necessary disclosures
a) The date when the financial statements were authorized for issu
b) About events that occurred after the reporting period.

2. This is the period during

which the preparers are
finalizing the financial
statements.

3. Some events that may

occur during this period may
have an effect on the financial
statements being prepared
 Key Definitions

Two types of events can be identified

Events after the 2. Non-

Date of approval 1. Adjusting events adjusting
reporting period
The date of approval is the events
They are those end of the post-Reporting-
Adjusting events are
events, both Period period those events that arise Non-adjusting
favorable and This date may vary after the Reporting events are
unfavorable, that depending on factors such Period, but before conditions that
occur between the as statutory requirements approval, that require arose after the
and the procedures the financial statements Reporting
end of the reporting followed in preparing, and
period and the date to be amended. Period.
finalizing, the financial
on which the statements.
financial statements
are authorized for
issue
 Example-1-
A bank is preparing its financial
statements for the year ended at 31
December 2018. Given the following
series of events, identify when shall
the post-reporting period end.
 The bank’s post-reporting
period ends on 24 April

Example-1- 2019, as this is the date on

which the shareholders
have approved the financial
statements at the annual
meeting.

On 16 April 2019
the shareholders approve the
financial statements at the On 28 April 2019
annual meeting.
the approved financial
statements are then
On 16 February 2019 filed with a regulatory
the bank announces its body.
profit and selected other
financial information. On 19 March 2019
the financial statements are made
available to shareholders, and
On 31 January 2019
others
management of a
bank completes draft
On 10 February 2019
financial statements
the board of directors reviews the
for the year to 31 financial statements and approves
December 2018. them for issue.
 ADJUSTING EVENTS

01 02
Evidence of a permanent diminution in Sale of inventory after the reporting
property value prior to the year end; period for less than its carrying value at
the year end;

03 04
Amounts received or paid in respect of
Insolvency of a customer with a balance
legal or insurance claims which were in
owing at the year end;
negotiation at the year end;

05 Evidence of a permanent diminution in

the value of a long-term investment
prior to the year end;
06 Discovery of error or fraud which shows that
the financial statements were incorrect.

07 Determination after the year end of the sale or purchase

price of assets sold or purchased before the year end.
 Example -2-
01 02
It has a carrying value of $2
million in its financial
At 31st December 2018, part statements. On January 16th
of an entity's computer 2019, management has been
system is being repaired. informed that the part is
irreparable, and the scrap
value is only $0,4 million
03
If the financial statements have
not been approved, management
has to reduce the carrying value of
the part to $0,4 million in the
financial statements to 31st
December 2018.
 NONADJUSTING EVENTS

01
A major business combination after the
Reporting Period, or disposal of a major
subsidiary;
02
Announcing a plan to discontinue an operation,
disposing of assets, or settling liabilities attributable
to a discontinuing operation, or entering into
binding agreements to sell such assets, or settle
such liabilities;

03 Major purchases and disposals of

assets, or expropriation of major assets
by government;
04 The destruction of a major operating unit
by a fire after the balance sheet
date;

05 Announcing, or commencing the

implementation of, a major
restructuring;
06 Abnormally large changes, after the
Reporting Period, in asset prices, or foreign
exchange rates;

07
Changes in tax rates, or tax laws enacted, or announced after
the Reporting Period, that have a significant effect on current
and deferred tax assets and liabilities;
 NONADJUSTING EVENTS

10
Entering into significant commitments or Commencing major litigation arising solely out

09 contingent liabilities, for example, by

issuing significant guarantees;
of events that occurred after the Reporting
Period
 Examples-3-

E1 E2 E3

Sales of inventors at less Out of court settlement of a legal

Discovery of a fraud. claim
than cost
Adjusting event Adjusting event
Fraud was perpetrated in Adjusting event
Out of court settlement of a legal
year under review. claim means ultimate outcome
known therefore uncertainty
eliminated.
 Examples-4-

E4 E5 E6

Nationalization or
Exchange rate fluctuations privatization by government Earthquake

Non Adjusting event Non Adjusting event Non Adjusting event

Movements in foreign Government action is after Natural disaster was not a
exchange rates after the the reporting period. condition existing at the end of the
reporting period are in reporting period.
response to changes in
economic conditions, etc
after the reporting period..
 Eternity is finalizing its
accounts for the year ended

Example-5- 31 December 2017. The

On 1 April 2018
Eternity announced a one-for-one
rights issue aiming to raise $15
million.
following events have arisen
since the year and the
financial director has asked
you to comment on the final
accounts:

On 15 March 2018
Eternity sold its former head
office building for $2.7 million.
At the year end the building was
unoccupied and carried at a
value of $3.1 million.
On 31 December 2017
trade receivables included a
figure of $250,000 in respect On January 2018
of Wico. On 8 March 2018, Freak floods caused $150,000 damage
when the debt was to a branch of Eternity in January 2018.
$200,000, Wico went into The branch was fully insured.
receivership.
Correspondence with the
receiver indicates that no
dividend will be paid to
 OTHER ISSUES
01
DIVIDENDS
•Dividends to owners declared after the reporting period
should not be recognized as a liability at the end of the
reporting period.
•Dividends are often thought of as a distribution of profit
and historically have been accounted for in the period to
which they relate. However, they do not meet the IAS
37 criteria of present obligation.
•IAS 1 requires disclosure of the amount of dividends
that were proposed or declared after the reporting
period, but before the financial statements were
authorized for issue..
02
GOING CONCERN
•Financial statements should not be prepared on a going
concern basis if management determines, after the
reporting period, that:
-It intends to liquidate the entity or to cease trading; or
-It has no realistic alternative but to do so.
•Deterioration in operating results and financial position
after the reporting period may indicate a need to consider
whether the going concern assumption is still appropriate.
•If the going concern assumption is no longer appropriate
the standard requires a fundamental change in the basis
of accounting.
•The following disclosures are required by IAS 1 if the
accounts are not prepared on the basis of the going
concern assumption:
•-A note saying that the financial statements are not
prepared on a going concern basis; or
•-management is aware of material uncertainties related
to events or conditions, which may cast significant doubt
on the entity’s ability to continue as a going concern.
 DISCLOSURE
Disclosures include:
•The date when the financial statements were authorized for issue
(and who gave that authorization) must be disclosed.

•If the entity’s owners or others have the power to amend the financial
statements after issuance, that fact must be disclosed.

•Disclosures about conditions that existed at the end of the reporting

period should be updated in the light of the new information received
after the reporting period.

•For material non-adjusting events, the following should be

•disclosed:
-the nature of the event; and
-an estimate of its financial effect (or a statement that such an
estimate cannot be made).
THANK YOU