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EVENTS AFTER THE
REPORTING PERIOD
( IAS10)
1

Nguyễn Thị Thu Hiền - 2022

OBJECTIVE OF IAS 10
• To prescribe:

➢ When an entity should adjust its financial statements for events

after the balance sheet date; and
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➢ The disclosure that an entity should give about the date when
the financial statements were authorised for issue and about
events after the balance sheet date

➢ The Standard also requires that an entity should not prepare its
financial statements on the going concern basis if events after
the balance sheet date indicate that the going concern
assumption is not appropriate 2

OVERVIEW

 Events after the reporting period

 Classification of events
Accounting for events
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1. EVENTS AFTER THE BALANCE SHEET DATE

Events that occur between the balance sheet date and the
date the financial statements are authorised for issue

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Beginning of Information
Balance Authorised Annual
period made
sheet date for issue meeting
public

Covered by financial Events after

statements balance sheet
date

1. EVENTS AFTER THE BALANCE SHEET DATE

Events that occur between the balance sheet date and the
date the financial statements are authorised for issue
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Beginning Balance Authorised Information

of sheet for made Annual
period date issue public meeting

Covered by financial Events after balance sheet date

statements
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1. EVENTS AFTER THE BALANCE SHEET DATE

Event after the balance sheet date:

An event, which could be favourable
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or unfavourable, that occurs between

the balance sheet date and the date that
the financial statements are authorised
for issue.
[IAS 10.3]

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Example 1
The management of an entity completes draft financial
statements for the year to 31 December 20X1 on 28
February 20X2. On 18 March 20X2, the board of
directors reviews the financial statements and authorises
them for issue. The entity announces its profit and

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selected other financial information on 19 March 20X2.
The financial statements are made available to
shareholders and others on 1 April 20X2. The
shareholders approve the financial statements at their
annual meeting on 15 May 20X2 and the approved
financial statements are then filed with a regulatory body
on 17 May 20X2.
THE FINANCIAL STATEMENTS ARE AUTHORISED FOR ISSUE ON 7
18 MARCH 20X2 (DATE OF BOARD AUTHORISATION FOR
ISSUE).

Example 2
On 18 March 20X2, the management of an entity
authorises financial statements for issue to its supervisory
board. The supervisory board is made up
solely of non-executives and may include representatives
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of employees and other outside interests. The supervisory

board approves the financial statements on 26 March
20X2. The financial statements are made available to
shareholders and others on 1 April 20X2. The shareholders
approve the financial statements at their annual meeting on
15 May 20X2 and the financial statements are then filed
with a regulatory body on 17 May 20X2.
THE FINANCIAL STATEMENTS ARE AUTHORISED FOR ISSUE ON 18
MARCH 20X2 (DATE OF MANAGEMENT AUTHORISATION FOR ISSUE 8

TO THE SUPERVISORY BOARD).

2. CLASSIFICATION OF EVENTS
EVENTS OCCURING AFTER THE
REPORTING PERIOD
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Adjusting Non- Adjusting

Events Events

Events that provide

Events that arose
evidence of conditions
subsequent to the
existed at the reporting
reporting date 9
date

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Definitions

❖Adjusting event: An event after the balance

sheet date that provides further evidence of
conditions that existed at the balance sheet

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date, including an event that indicates that the
going concern assumption in relation to the
whole or part of the enterprise is not
appropriate. [IAS 10.3]

❖Non adjusting event: An event after the

balance sheet date that is indicative of a
condition that arose after the balance sheet
date. [IAS 10.3]
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2. CLASSIFICATION OF EVENTS

Adjusting event is an event

ADJUSTING EVENT
 occurring after the reporting period that provides further
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evidence of conditions that existed at the end of the reporting

period,
 including an event that indicates that the going concern
assumption in relation to the whole or part of the enterprise is
not appropriate

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2. CLASSIFICATION OF EVENTS

TYPES OF ADJUSTING EVENTS

• Fixed Assets: The subsequent determination of the purchase
price or of the proceeds of sale of assets purchased or sold
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before the year-end.

• Investments: The receipt of a copy of the financial statements
or other information in respect of an unlisted company which
provides evidence of a diminution other than temporary in the
value of a long term investment.
• Taxation: The receipt of information concerning clarification
of tax law

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2. CLASSIFICATION OF EVENTS

TYPES OF ADJUSTING EVENTS

 Stocks and Work in Progress: The receipt of proceeds of sales
after the balance sheet date or other evidence concerning the
net realizable value of stocks.

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 Debtors: The renegotiation of amounts owed by debtors, the
insolvency of a debtor or the receipt of cash or other
information indicating that the recoverable amount at the
balance sheet date is not fairly stated.
 Claims: Amounts received or receivable in respect of insurance
or legal claims which were in course of negotiation at balance
sheet date
 Discoveries: The discovery of errors or frauds which show that
financial statements were incorrect
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2. CLASSIFICATION OF EVENTS

TYPES OF NON-ADJUSTING EVENTS

 Mergers, Acquisitions and Business Combinations
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 Reconstructions and proposed reconstructions

 Allotment/ buy back of shares and debentures
 Losses of Fixed Assets or stocks as a result of a
catastrophe such as fire or flood or earthquake

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2. CLASSIFICATION OF EVENTS
TYPES OF NON-ADJUSTING EVENTS
 Closing significant part of the trading activities if this
was not anticipated at the year end
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 Changes in rates of Foreign Exchange

 Strikes and other labour disputes
 Change in tax rate that affect deferred tax asset and
liability
 Beginning of a litigation that arises out of events
happening after reporting date.

declares dividends after the balance sheet date

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DISTINCTION: ADJUSTING V/S NON-ADJUSTING

Adjusting event Non-adjusting event

Provides evidence of Indicative of

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conditions existing AT conditions arising
reporting date of AFTER reporting date
31.12.2012 of 31.12.2012

31.12.2012 15.01.2013 06.02.2013 18.02.2013

Reportin e.g. Customer e.g. Value of an Date

g date included in list of investment falls. financial
accounts receivable Action: statements
balances at 31.12.09 Disclosure by authorized
goes bankrupt way of note to for issue
Action: financial
write off uncollectible statements
portion of balances
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3. ACCOUNTING FOR EVENT

Events which occur
after the year-end but
before the financial
statements are
approved.
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Gives new evidence Impacts Going

on conditions which NO concern
existed at the year- Assumptions?
end?
YES
YES

NO

Any Other,
Adjust Disclose:
Financial ➢ Nature 17
Statements ➢ Estimate of
Financial Effect.

3. ACCOUNTING FOR EVENT

 Adjust financial statements for adjusting events: events after
the balance sheet date that provide further evidence of
conditions that existed at the balance sheet, including events
that indicate that the going concern assumption in relation to
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the whole or part of the enterprise is not appropriate. [IAS

10.8]
 Do not adjust for non adjusting events: events or conditions
that arose after the balance sheet date. [IAS 10.10]
 If an entity declares dividends after the balance sheet date,
the entity shall not recognise those dividends as a liability at
the balance sheet date. That is a non adjusting event. [IAS
10.12]
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3. ACCOUNTING FOR EVENT

Dividends
• Dividends proposed or declared after the balance

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sheet date should not be recognised as a liability
at balance sheet date
Going concern
• If the going concern assumption becomes
inappropriate after the balance sheet date, the
financial statements should not be prepared on a
going concern basis
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GOING CONCERN ISSUES

 An entity shall not prepare its financial statements on a going

concern basis if the management determines after the reporting
date
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❖ either that it intends to liquidate the entity

❖ or to cease trading
❖ or that it has no realistic alternative but to do so

 Deterioration in operating results and financial position after

the reporting period may indicate a need to consider whether
the going concern assumption is still appropriate 20

DISCLOSURE

• Date of authorisation for issue of financial statements (FS)

• Who gave authorisation
• Eventual power of someone to amend the FS after issue
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• Updating of disclosures about conditions existing at the

balance sheet date
• Material non-adjusting events:
– nature of the event
– an estimate of its financial effect, or that an estimate cannot be
made

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CASE 1

 Facts: During the year 2005, Thror Corp. was sued by a

competitor for $15 million for infringement of a trademark. Based
on the advice of the company’s legal counsel, Thror Corp. accrued
the sum of $10 million as a provision in its financial statements for

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the year ended December 31, 2005. Subsequent to the balance
sheet date, on February 15, 2006, the Supreme Court decided in
favor of the party alleging infringement of the trademark and
ordered the defendant to pay the aggrieved party a sum of $14
million. The financial statements were prepared by the company’s
management on January 31, 2006, and approved by the board on
February 20, 2006.
 Required: Should Thror Corp. adjust its financial statements for
the year ended December 31, 2005?
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CASE 2

 Facts: Shani Corp. carries its inventory at the lower of cost and
net realizable value. At December 31, 2005, the cost of inventory,
determined under the first-in, first-out (FIFO) method, as reported
in its financial statements for the year then ended, was $10
million. Due to severe recession and other negative economic
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trends in the market, the inventory could not be sold during the
entire month of January 2006. On February 10, 2006, Shani Corp.
entered into an agreement to sell the entire inventory to a
competitor for $6 million.
 Required Presuming the financial statements were authorized for
issuance on February 15, 2006, should Shani Corp. recognize a
write-down of $4 million in the financial statements for the year
ended December 31, 2005?
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