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MFRS 110
EVENTS AFTER THE
REPORTING PERIOD
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Definition

MFRS 110 defines events after the reporting date as ‘those events, both
favourable and unfavourable, that occur between the end of the reporting
period and the date when the financial statements are authorised for issue’.

The standard has identified two types of events.

They are:
a. Those events that provide further evidence of conditions that existed
at the end of the reporting period (adjusting events), and
b. Those that are indicative of conditions that arose after the end of the
reporting period (non-adjusting events).

Date When The Financial Statements Are

Authorised For Issue

The date on which the financial statements are

authorised for issue depends on the
management structure, statutory requirements
and procedures followed by each entity in
preparing and finalising the financial
statements.

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Adjusting Events
• Adjusting events affect the financial position and performance
measurement of the entity even though they occurred between the
reporting date and the date the financial statements were authorised for
issue.
• The accounting treatment is to adjust the elements of financial
statements affected by these events.
– Measurement of bad and doubtful debts
– Determining the net realisable value of inventory
– Court case
– Impairment of assets
– Cost of assets purchased or proceeds from disposal of assets
– Profit sharing or bonus
– Fraud

Example: measurement of bad and doubtful debts

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Example: measurement of bad and doubtful debts

Example: Determining the Net realisable value of inventory

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Example: Court case

Example: Profit Sharing or Bonus

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Non-Adjusting Events

For non-adjusting events, no adjustments are made but

the following disclosure should be provided:
– the nature of the event, and
– the estimate of the financial effect, or a statement
that such an estimate cannot be made.

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Examples of non-adjusting events:

 Decline in the market value of investments after the
reporting date,
 A major business combination after the reporting date
 Announcing a plan to discontinue an operation,
disposing of assets etc.
 Major purchases and disposals of assets or
expropriation of major assets by government.
 Destruction of a major production plant by a fire after
the balance sheet date.
 Major restructuring

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Example: No adjusting / Need to disclosure in notes to account

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Dividends and Going Concern Status

• Dividends
Proposed dividends are not present obligations and are not to
be recognised as liabilities. A disclosure is required.

• Going Concern Status

Where the management determines after the reporting date
that it intends to liquidate the entity or to cease trading, or
that it has no realistic alternative but to do so, then the going
concern assumption used in preparing the financial statements
may no longer be appropriate. Financial statements are to be
prepared on a liquidation basis.

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Tutorial

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