Events after the reporting

period – IAS 10

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 OVERVIEW
• Scope and objectives
• Events after the reporting period
• Recognition and Measurement
• Dividends
• Going concern
• Disclosures

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 Scope and objectives
• It prescribes:
• (a) when an entity should adjust its financial statements
for events after the reporting period;
• (b) the disclosures that an entity should give about the
date when the financial statements were authorised for
issue and about events after the reporting period.
• The Standard also requires that an entity should not
prepare its financial statements on a going concern basis
if events after the reporting period indicate that the going
concern assumption is not appropriate
• It should be applied in the accounting for, and disclosure
of, events after the reporting period.

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 Events after the reporting period

• Those events, favourable and unfavourable,

that occur between the end of the reporting
period and the date when the financial
statements are authorised for issue.
• Two types of events can be identified:
• (a) those that provide evidence of conditions
that existed at the end of the reporting period
(adjusting events )
• (b) those that are indicative of conditions
that arose after the reporting period (non-
adjusting events )

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 Recognition and Measurement
• Adjusting events:
• An entity shall adjust the amounts recognised in
its financial statements to reflect adjusting
events after the reporting period
• Non adjusting events
• An entity shall not adjust the amounts
recognised in its financial statements to reflect
non-adjusting events after the reporting period.

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Typical examples of adjusting events are:

 The bankruptcy of a customer after the reporting period

usually suggests a loss of trade receivable at the end of the
reporting period.

 The sale of inventory at a price substantially lower than its

cost after the reporting period confirms its net realizable
value at the end of the reporting period.

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 The sale of property, plant, and equipment for a net
selling price that is lower than the carrying amount
is indicative of an impairment before the end of the
reporting period.
 The determination of an incentive or bonus payment
after the reporting period when an entity has a
constructive obligation at the end of the reporting
period
 A deterioration in the financial position (recurring
losses) and operating results (working capital
deficiencies) of an entity that has a bearing on the
entity’s continuance as a “going concern” in the
foreseeable future.
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Examples of nonadjusting events include:

 Declaration of an equity dividend

 Decline in the market value of an investment after
the reporting period
 Entering into major purchase commitments in the
form of issuing guarantees after the reporting period
 Classification of assets as held for sale under IFRS 5
and the purchase or disposal of assets after the
reporting period
 Commencing a lawsuit relating to events that
occurred after the reporting period
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 Dividends
• If an entity declares dividends to holders of
equity instruments (as defined in IAS 32
Financial Instruments: Presentation) after the
reporting period, the entity shall not
recognise those dividends as a liability at the
end of the reporting period.
• It is disclosed in the notes in accordance with
IAS 1 Presentation of Financial Statements.

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 Going concern
• An entity shall not prepare its FS on a
going concern basis if :
• 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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 Disclosure
• An entity shall disclose the date when the
financial statements were authorised for
issue and who gave that authorisation.
• If the entity’s owners or others have the
power to amend the financial statements
after issue, the entity shall disclose that
fact.

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

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THANK YOU

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