Junior Philippine Institute of Accountants

University of Cebu – Banilad Chapter

IAS 10 EVENTS after the Reporting Period TEST BANK

1. Events after the end of reporting period are favorable or unfavorable events that
a. Occur between the end of the reporting period and the date of the next annual
financial statements.
b. Occur between the end of the reporting period and the date of the next interim or
annual financial statements.
c. Occur between the end of the reporting period and the date when the financial
statements are authorized for issue.
d. Occur between the end of reporting period and the date of the next interim financial
statements
2. Adjusting events are events that
a. Provide evidence of conditions that existed at the end of the reporting period.
b. Are favorable and indicative of conditions that arose after the end of the reporting
period.
c. Are unfavorable and indicative of conditions that arose after the end of the reporting
period.
d. Provide of conditions that existed after the date the financial statements were
authorized for issue.
3. When after the end of reporting period an event occurs that is indicative of conditions
that arose after the end of reporting period
a. The entity shall disclose the nature and effect of the event in the financial statements.
b. The entity shall adjust the related amount in the financial statements.
c. The entity shall disclose the nature and effect of the event and adjust the related
amount.
d. The entity shall disclose the nature but not the effect of the event.
4. The financial statements are authorized for issue
a. When the board of directors reviews the financial statements and authorizes them for
issue.
b. When the financial statements are made available to shareholders
c. When the shareholders approve the financial statements at their annual meeting,
d. When the approved financial statements are filed with a regulatory body.

5. Which event after the reporting period would require adjustment before issuance of
the financial statements?
a. Loss of plant as a result of fire
b. Change in the quoted market price of financial asset held as an investment
c. Loss on inventory resulting from a storm surge
d. Loss on a lawsuit the outcome of which was deemed uncertain at year-end.
6. Non-adjusting events after reporting period that require disclosure include all of the
following, except
a. A major business combination after reporting period
b. Announcing a plan to discontinue an operation
c. Expropriation of major asset after reporting period
d. Destruction of a major production plant by a fire before the end of the reporting
period
7. Which event after the reporting period would require disclosure in the financial
statements?
a. Retirement of the president
b. Settlement of litigation when the event that gave rise to the litigation occurred prior
to the end of reporting period
c. Strike of employees
d. Issue of a large amount of ordinary shares
8. Events after reporting period that provide evidence about conditions that existed at
the current year-end and affect the realizability of accounts receivable should be
a. Discussed only in the management commentary.
b. Disclosed only in the notes
c. Used to record an adjustment to doubtful accounts expense.
d. Used to record an adjustment to retained earnings.
9. All of the following events would be classified as non-adjusting events after reporting
period, except
a. The entity announced the discontinuance of the assembly operation
b. The entity entered into an agreement to purchase the currently leased office building
c. Destruction of a major production plant by fire
d. A mistake was discovered in the calculation of the allowance for uncollectible
accounts receivable
10. Which statement is true regarding events after the end of reporting period?
a. Recognize a loss for all recognized and unrecognized subsequent events in the current
year.
b. Recognize a gain or loss for any recognized subsequent event in the current year.
c. Recognize a loss for a recognized subsequent event inn the financial statements in the
year when the subsequent event occurs.
d. Recognize a loss for a recognized subsequent event in the current year financial
statements.
11. At the end of the current reporting period, an entity carried receivable from a major
customer. The customer declared bankruptcy after the end of reporting period but
before the issuance of financial statements. What should be reported at the current year-
end?
a. Disclose the fact that the customer has declared bankruptcy
b. Make a provision for this post-reporting period event
c. Ignore the event
d. Reverse the sale pertaining to this receivable
12. An entity built a new factory building during the current year. Subsequent to the
current year-end and before the financial statements are issued, the building was
destroyed by fire and the claim against insurance entity proved futile. What should be
reported at the current year-end?
a. Write off the carrying amount of the building
b. Make a provision for one-half of the carrying amount of the building
c. Make a provision for the entire carrying amount of the building
d. Disclose this non- adjusting event in the notes
13. An entity deals extensively in foreign currency transactions. Subsequent to the
reporting period and before the date of authorization for the issue of the financial
statements, there were abnormal fluctuations in foreign currency rate. What should be
reported at the current year-end?
a. Adjust the foreign exchange year-end balances to reflect the abnormal adverse
fluctuations.
b. Adjust the foreign exchange year-end balances to reflect all the abnormal fluctuations
and not just adverse movements.
c. Disclose the post-reporting period event in the notes as a non-adjusting event.
d. Ignore the post-reporting period event.
14. Which of the following is not an objective of IAS 10?
a. To prescribe when an entity should adjust its financial statements for events after the
reporting period
b. To prescribe how an entity should distinguish favorable events from unfavorable
c. To prescribe the disclosures that an entity should give about the date when the
financial statements were authorized for issue and about events after the reporting
period
d. To require an entity should not prepare its financial statement on a going concern
basis if events after the reporting period indicate the going concern assumption is not
appropriate
15. Events after the reporting period are __________ events that occur between the
end of the reporting period and the date when the financial statements are authorized
for issue.
A. predictable
B. non-predictable
C. favorable
D. unfavorable
E. B and D
F. C and D
16. Which of the following information cannot indicate that the asset was impaired at
the end of the reporting period?
a. The bankruptcy of a customer after the reporting period
b. The sale of inventories after the reporting period
c. The destruction of a major production plant by a fire after the reporting period
d. All of the above
17. Those events, favourable and unfavourable, that occur between the end of the
reporting period and the date when the financial statements are authorized for issue.
a. Events after reporting period
b. Adjusting Events
c. Non-adjusting Events
d. Material Non-adjusting events
18. Those that are indicative of conditions that arise after the reporting period
a. Events after reporting period
b. Adjusting Events
c. Non-adjusting Events
d. Material Non-adjusting events
19. Those that provide evidence of conditions that existed at the end of the reporting
period
a. Events after reporting period
b. Adjusting Events
c. Non-adjusting Events
d. Material Non-adjusting events
20. Events that occur after the December 31, 2011 balance sheet date (but before the
balance sheet is issued) and provide additional evidence about conditions that existed at
the balance sheet date and affect the realizability of accounts receivable should be
a. discussed only in the MD&A (Management's Discussion and Analysis) section of the
annual report.
b. disclosed only in the Notes to the Financial Statements.
c. used to record an adjustment to Bad Debt Expense for the year ending December 31,
2011.
d. used to record an adjustment directly to the Retained Earnings account
21. Which of the following post-balance-sheet events would generally require disclosure,
but no adjustment of the financial statements?
a. Retirement of the company president
b. Settlement of litigation when the event that gave rise to the litigation occurred prior
to the balance sheet date.
c. Employee strikes
d. Issue of a large amount of capital stock
22. Which of the following subsequent events (post-balance-sheet events) would require
adjustment of the accounts before issuance of the financial statements?
a. Loss of plant as a result of fire
b. Changes in the quoted market prices of securities held as an investment
c. Loss on an uncollectible account receivable resulting from a customer's major flood
loss
d. Loss on a lawsuit, the outcome of which was deemed uncertain at year end.
23. Should details of material adjusting or material non-adjusting events after the
Statement of Financial Position date be disclosed in the notes to financial statements
according to IAS 10 Events after the reporting period falls under?
a. Events after reporting period
b. Adjusting Events
c. Non-adjusting Events
d. Material Non-adjusting events
24. Which of the following material events after the reporting period and before the
financial statements are approved are adjusting events?
a. A valuation of property providing evidence of impairment in value at the Statement of
Financial Position date.
b. Sale of inventory held at the Statement of Financial Position date for less than cost.
c. Discovery of fraud or error affecting the financial statements
d. All of the above
25. If a material non-adjusting event occurs after the reporting date but before the
financial statements are approved, which information should be disclosed in the
financial statements?
a. An estimate of the financial effect only
b. No disclosure required
c. The nature of the event and an estimate of the financial effect
d. The nature of the event only

26. Which of the following material events after the reporting period and before the
financial statements are approved are adjusting events?
a. A factory with a value of 1,000,000 was destroyed by fire
b. The company issued 2,000,000 ordinary shares
c. A customer owing 1,500,000 went bankrupt
d. None of these
27. Fiserv Inc. built a new factory building during 2013 at a cost of $20 million. At
December 31, 2013, the net book value of the building was $19 million. Subsequent to
year-end, on March 15, 2014, the building was destroyed by fire and the claim against the
insurance company proved futile because the cause of the fire was negligence on the part
of the caretaker of the building. If the date of authorization of the financial statements for
the year ended December 31, 2013, was March 31, 2014, Fiserv Inc. should
a. Write off the net book value to its scrap value because the insurance claim would not
fetch any compensation.
b. Make a provision for one-half of the net book value of the building.
c. Make a provision for three-fourths of the net book value of the building based on
prudence.
d. Disclose this non-adjusting event in the footnotes.
28. Orange Inc. deals extensively with foreign entities, and its financial statements reflect
these foreign currency transactions. Subsequent to the balance sheet date, and before the
“date of authorization” of the issuance of the financial statements, there were abnormal
fluctuations in foreign currency rates. Orange Inc. should
a. Adjust the foreign exchange year-end balances to reflect the abnormal adverse
fluctuations in foreign exchange rates.
b. Adjust the foreign exchange year-end balances to reflect all the abnormal fluctuations
in foreign exchange rates (and not just adverse movements).
c. Disclose the post–balance sheet event in footnotes as a non-adjusting event.
d. Ignore the post–balance sheet event.
29. At the balance sheet date, December 31, 2013, Sixes Inc. carried a receivable from
“QWERT”, a major Customer, at $10 million. The “authorization date” of the financial
statements is on February 16, 2014. QWERT declared bankruptcy on Valentine’s Day
(February 14, 2014). Sixes Inc. will
a. Disclose the fact that “QWERT” has declared bankruptcy in the footnotes.
b. Make a provision for this post–balance sheet event in its financial statements (as
opposed to disclosure in footnotes).
c. Ignore the event and wait for the outcome of the bankruptcy because the event took
place after the year-end.
d. Reverse the sale pertaining to this receivable in the comparatives for the prior period
and treat this as an “error” under IAS 8.

30. What is the date of approval for issue of the financial statements of “Dodates” a public
limited company, prepared for the reporting period from April 1, 2016 to March 31, 2017,
in a situation where following dates are available
a. Completion of preparation of financial statements May 28, 2017
b. Board reviews and approves for issue June 19, 2017
c. Available to shareholders July 01, 2017
d Annual General Meeting September 15, 2017
e. Filed with regulatory authority October 16, 2017
ANSWERS:
1. C 11. B 21. D
2. A 12. D 22. D
3. A 13. C 23. C
4. A 14. B 24. D
5. D 15. F 25. C
6. D 16. C 26. C
7. D 17. A 27. D
8. C 18. C 28. C
9. D 19. B 29. B
10. D 20. C 30. B