PAS 10 Events after the Reporting Period

QUIZ:
1. According to PAS 10, these are those events, favorable and unfavorable, that occur between the
end of the reporting period and the date when the financial statements are authorized for issue.
a. Events after the reporting period c. Adjusting events
b. Non-adjusting events d. all of these

2. The Sarin Company's financial statements for the year ended 30 April 20X8 were approved by its
finance director on 7 July 20X8 and a public announcement of its profit for the year was made on
10 July 20X8. The board of directors authorised the financial statements for issue on 15 July 20X8
and they were approved by the shareholders on 20 July 20X8. Under PAS 10, after what date
should consideration no longer be given as to whether the financial statements to 30 April 20X8
need to reflect adjusting and non-adjusting events?
a. 7 July 20X8
b. 10 July 20X8
c. 15 July 20X8
d. 20 July 20X8
(Adapted)

3. Which of the following is an example of a non-adjusting event?

a. Sale of inventory for less than its carrying value shortly after the reporting period
b. Amounts received in respect of an insurance claim being negotiated at the period end
c. Destruction of a machine by fire after the reporting period
d. Bankruptcy of a major customer with a balance owing at the period end
(Adapted)

4. One of Entity A’s delivery trucks had an accident on February 14, 20x2. The truck is totally
wrecked and is uninsured. Entity A’s December 31, 20x1 current-period financial statements
were authorized for issue on March 31, 20x2. Entity A asked you if it can write-off the carrying
amount of the destroyed truck from its December 31, 20x1 statement of financial position. What
will you tell Entity A?
a. Yes, go ahead. Write-off the truck because the event is an adjusting event.
b. No. Don’t write-off the truck because the event is a non-adjusting event.
c. No. Don’t write-off the truck because the event is a non-adjusting event. You should, however,
disclose the event if you deem it to be material.
d. Yes, go ahead. I will support you.

5. Which of the following is most likely to be a non-adjusting event?

a. A major customer liquidates its business after the end of the reporting period.
b. The entity announces a major restructuring after the end of the reporting period.
c. The settlement after the reporting period of a court case that confirms that the entity has a
present obligation at the end of reporting period.
d. The determination after the reporting period of the cost of asset purchased, or the proceeds
from asset sold, before the end of reporting period.

“For the Lord gives wisdom; from his mouth come knowledge and understanding.” (Proverbs 2:6)
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