Ind As 10

Events after the

reporting period
Certificate Course on Ind AS | Day 2

Ind AS Implementation Committee - The Institute of Chartered Accountants of India New Delhi, India
Disclaimer: The views expressed herein are solely those of the Faculty/Presenter and not that of the ICAI or any of its committees. The ICAI or the Faculty or Preparer of this material do not accept any responsibility for omission
or inadequacy of the contents in this document and for loss caused to any person who acts or refrains from acting in reliance on the contents of this document irrespective of the cause of / reason for the loss.
Objective & Scope
Coverage:
• Events after the reporting period
• Disclosure of the date of issue of FS
• Other Aspects
• Going concern Impact of such events
• Dividend
• Non Cash Dividend – Appendix A

Ind AS 10 scope is to provide disclosure as well as accounting guidance

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Definitions
Events after reporting date:
Those events: Favorable or unfavorable
Occurring between the end of the reporting period
AND date when FS statement are approved for issue by BOD
they could be adjusting or non-adjusting events

End of
Start of
Reporting Approval by
Reporting Results made Approval by
Date BOD for
Period Public Shareholders
(Say March issues
(Say April 1)
31)

Accounting Year Time ::: Events after Events during this period are not
the reporting period considered

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Approval for Issue of FS
 Company: Approval of FS is by Board of Directors.
Approved by Management
 Other Entities: By corresponding authority and issued to supervisory
board (Non –executive) –
Day 1

Issue
Approval by the board and then
approval by the shareholders
Management issue FS to
supervisory board (non executive) by Management
for approval
Approval of FS by
Date of Approval supervisory board and
made available to
shareholder on day 2
Date of approval by the Board
Shareholders approve the
FS and at their annual
Date of approval is date of issue meeting on Day 10
FS filed with regulatory
authority on day 15

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 Event: Types + Recognition
Events after
Two types of events: Ind As 10 Reporting date
• Adjusting Events : Those
provide evidence of
conditions that existed at end
Type Adjusting Non Adjusting

of reporting period
Amount Recognized in the FS to
• Non – Adjusting Event: Those be adjusted to reflect the Amount recognized in FS NOT
Accounting adjusting event or reco amount to be adjusted for
that are indicative of not previously reco.

conditions that arose after

the reporting period Update disclosure that To be disclosed –
Disclosure relates to those conditions
in light of new information If material

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Case Study –Adjusting events
Situation : There is a Court pending against an entity, and a judgement is pronounced after the end of reporting date
but before approval of FS.
Accounting till end of
Reporting period
Contingent liability disclosed
Contingent liability disclosed
Contingent liability disclosed
Provision made for part
amount
Provision made for part
amount
Result of Changes that should be reco in FS Remarks
judgement after
reporting date
Favorable Remove contingent liability.
Favorable with Award can be recognized at the point of Virtual certainty may be
award virtually certain, otherwise the asset is a in the next year on date
contingent asset of decision of court
Un- Favorable Appropriate provision as per Ind As 37 and Present Obligation
remove from contingent liability with
disclosure
Favorable / with Derecognize provision.
award In case of award as above
Un- Favorable Appropriate provision as per Ind As 37 Present Obligation
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Situations –Adjusting events
• Bankruptcy of a credit impaired debtors filed after the reporting period
• Decline in sales price of a product after the reporting period – Used for determining
NRV.
• Determination of amount of profit sharing or bonus
• Discovery of frauds or errors
• Sales amount or purchase amount of an asset

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Situation : Breach of covenant – LT loans
There is breach of material covenant of long term contract on or 1. This is inserted as per
before the end of reporting period
changes in Ind As 1
2. Carve out from IFRS.
Due to breach the loan becomes payable on demand.
Thus such long term need to be now classified as Current
Liability

After the end of reporting period the management approach

the lender & request not to demand payment as a consequence
of such breach

Lender approves such request on or before the date of approval

of financial statements

Such event is considered as adjusting even and the loan is

considered as long term as the breach is no longer
implemented

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Case Study (ICAIEducationmaterial)

Question :
For the year ended 31st March, 2017, XYZ made a general provision for bad debts @ 5%. In the last week of February 2017 a
debtor for Rs. 2 lakhs had suffered heavy loss due to an earthquake; the loss was not covered by any insurance policy.
Considering the event of earthquake, the company made a provision @50% of the amount receivable from that debtor apart
from the general provision of 5% on remaining debtors. In April 2017 the debtor became bankrupt.
Can the company provide for the full loss arising out of insolvency of the debtor in the financial statements for the year ended
31st March, 2017?
Would the answer be different if earthquake had taken place after March 31, 2017, and therefore, XYZ Ltd. did not make any
specific provision in context that debtor and made only general provision for bad debts @5% on total debtors?

Answer:

Yes. As the events are adjusting event as condition exists at the end of the reporting date though the debtor is declared
insolvent after the reporting period. Full provision of 100% should be made

No, As bankruptcy of the debtor in this case is a non adjusting event, since only a general provision was made and there was
no indication that the debtor may be impaired. If amount is material, disclosure should be made.
Situations – NON Adjusting events
• Decline in the fair value of an investment between the reporting date and issue of FS. :- The
decline is might not be due to the conditions on the reporting date.
• No adjustment required
• No update in the amount of investment disclosed
• Only disclosure

• Dividends: declared after reporting date to holders of equity instruments.

• NON adjusting event and no liability for dividend is recognized
• Only disclosed
• Position is same even if the dividends are approved before approval of accounts
• Past practice does not make a difference

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Situations – NON Adjusting events
In such cases disclosure is generally required.
• Major Business Combinations (specific disclosure – Ind As 103) or disposing of a
major subsidiary
• Plan to discontinue operations
• Announcing or commencing major Restructuring (Ind As 37)
• Major purchase or disposal of asset | acquisition by government | Classification of
asset held for sale (Ind As 105)
• Destruction by fire of major asset after the reporting date
• Major changes in Foreign exchange rates
• Change in tax rates/laws having major effect on current or deferred tax
• Significant commitment or contingent liability (by issue of guarantee)
• Commencement of major litigation

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Case Study (ICAIEducation Material)

Question:
ABC Ltd. prepared interim financial report for the quarter ending June 30, 2015. The interim
financial report was approved for issue by the Board of Directors on July 15, 2015.
Whether events occurring between end of the interim financial report and date of approval by BOD,
i.e., events between July 1, 2015 and July 15, 2015 that provide evidence of conditions that existed
at the end of the interim reporting period shall be adjusted in the interim financial report ending
June 30, 2015?
Answer:
Para 19 of Ind AS 34, provides that an interim financial report shall not be described as complying
with Ind ASs unless it complies with all of the requirements of Ind ASs.
Events occurring between July 1, 2015 and July 15, 2015 that provide evidence of conditions that
existed at the end of the interim reporting period should be adjusted in the interim financial report
ending June 30, 2015.

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Case Study (ICAIEducation Material)

Question:
The Board of Directors of ABC Ltd. approved the FS for 2016-17 for issue on June 15, 2017. The
management of ABC Ltd. discovered a major fraud and decided to reopen the books of account.
The financial statements were subsequently approved by the BOD on June 30, 2017. What is the
date of approval for issue as per Ind AS 10 in the given case??

Answer:
Date of approval is the date on which the FS are approved by the BOD for issue. In the given case,
there are two dates of approval by BOD.
The FS were reopened for further adjustments subsequent to initial approval. The date of approval
should be taken as the date on which FS are finally approved by the BOD. Therefore, in the given
case, the date of approval for issue as per Ind AS 10 should be considered as June 30, 2017..

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Case Study (ICAIEducationmaterial)

Question :
A Ltd took a civil contract for Rs. 200 Crores and started execution 2016-17, and continued in the next financial year also. In
May, 2017, the company found that the site had a rocky surface and cost of contract would go up by an extra Rs. 50 crore,
which would not be recoverable as per the terms of the contract.

The FS for 2106-17 were approved by the Board of Directors on June 15, 2017.

How will you treat the above in the financial statements for the year ended 31st March 2017

Answer:

Since the rocky surface was there, the condition was existing at the end of the reporting period, even though it came to
knowledge later, therefore, it is an adjusting event. The cost of the project and profit should be accounted for accordingly.
Case Study (ICAIEducationmaterial)

Question :
A company is entitled to duty draw back if it exceeds its turnover above a specified limit. To claim duty drawback, the
company needs to file application within 15 days of meeting the specified turnover. If application is not filed within stipulated
time, the Department has discretionary power of giving duty draw back credit.
The company achieved specified turnover by March 2016 but filed the application on April 20, 2017, which is after the
stipulated time of 15 days of meeting the turnover condition.
Duty drawback has been credited by the Department on June 28, 2017 and financial statements have been approved by the
Board of Directors of the company on July 26, 2017.

Whether duty drawback credit should be treated as an adjusting event

Ans :
The department has a discretion power of giving duty draw back credit in case of late application. Thus the refund becomes a
contingent asset. A contingent asset can be recognized only when it is virtually certain. This is achieved on June 28, 2017. Thus
the company can credit the refund in the next financial year only.
Case Study (ICAIEducation Material)

Question:
What would be the treatment for dividends declared to redeemable preference shareholders after the
reporting period but before the financial statements are approved for issue for the year 2016-17.
Whether Ind AS 10 prescribes any accounting treatment for such dividends?
Answer:
1. Equity shares proposed dividend are not considered as liabilities and accordingly
not accounted for and just disclosed.
2. Ind As is silent about dividends on PS.
3. Redeemable PS provides for mandatory redemption at a fixed or determinable
amount or date and thus are financial liabilities.
4. Thus the same is treated like a bond and interest is charged on time basis

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Situations – Going Concern
(Background : Going concern issue is triggered if the management is aware of material uncertainties related to events or
conditions that cast significant doubt upon the entities' ability to continue as a going concern)

If even after the reporting period

• The management determines that:
• It Intends to close liquidate
• Cease trading
• Or there is no other realistic alternative
• Then, per Ind AS 10, accounts are not be prepared on going concern basis
- Change basis of accounting
- Not adjusting the amounts within original basis

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Distribution of non cash assets to owners
Appendix A
When non cash dividends are distributed to owners or when the owner is given a choice to take cash in
lieu of the non cash assets.
A: Appendix A to Ind AS 10 clarifies
• When to reco. Dividend payable: Appropriately authorized & is no longer at the discretion of the entity
• Amount of Dividend to be reco.: Fair Value of the net Assets to be distributed
• Review and adjust the dividend payable, at each reporting date and at settlement (due to FV changes)
• At time of settlement of dividend payable, the difference, if any, between the dividend payable and the
carrying amount of assets distributed in P & L account and disclose it separately
• Disclosure of movement of carrying amount of dividend payable, changes in fair value.
• Separate disclose if the asset being held for distributed meets the definition of discontinued operations.
• If dividend is declared after reporting date and before approval of FS then disclosure of nature of assets, its CA
at end of reporting period and FV of such assets.

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Disclosures
Following disclosures to be made
A: Date
• When FS were approved for issue
• Who gave the approval
• If entity owners or others have power to amend FS, then that fact.
B. Adjusting Events:
• Update about the disclosure in light of new information
• Even if no amount is required to be adjusted | generally used for contingent liabilities disclosure
C. Non – Adjusting Events:
• Disclose the following for each material category
• Nature of event
• Estimate of its financial effect OR the fact that estimate cannot be made.

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 Accounting Policy Disclosure

Source: Annual Report Asian Paints 2022

GAAP Difference
Items IND AS 10 IAS 10 / IFRC 17

Breach of covenants Adjusting event No mention

Items IND AS 10 Events after the Reporting AS 4, Contingencies and Events Occurring After the
Period Balance Sheet Date

Disclosure of material non-
adjusting event
Going Concern
Breach of material covenants
for long term loans
Non cash dividend to Equity
holders
Dividend
Required to be disclosed in FS
Requires to change the basis of accounting
Adjusting event
Appendix A. Guidance provided
No Liability to be recognized
Required to be disclosed In the report of approving
authority.
Requires to adjust the assets and liabilities
No mention
No such mention
To be recognized in FS due to Schedule VI of
Companies Act. Now not applicable
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Thank You