ILLUSTRATIVE EXAMPLES – EVENTS AFTER REPORTING PERIOD

Problem 1:
The audit of Nagtiwala Company for the year ended December 31, 2022, was completed on March 1, 2023. The
financial statements were signed by the managing director on March 15, 2023, and approved by the shareholders on March
31, 2023. The following subsequent events had occurred:
a. On January 20, 2023, a customer owing P400,000 to Nagtiwala filed for bankruptcy. The financial statements
included an allowance of P40,000 pertaining to this customer.
b. Nagtiwala's issued share capital comprised 100,000 ordinary shares with P40 par value. Nagtiwala issued additional
30,000 shares on March 1, 2023 at par.
c. Machinery with carrying amount of P220,000 was destroyed by fire on December 15, 2022. Nagtiwala has booked a
receivable of P160,000 from the insurance company on December 31, 2022. After the insurance company
completed an investigation on February 1, 2023, it was discovered that the fire took place due to negligence of the
machine operator. As a result, the insurer's liability was zero on this claim.
Q: What total amount should be reported as “adjusting events” on December 31, 2022?

Problem 2:
The audit of Lumilipad Company for the year ended December 31, 2022 was completed on March 1, 2023. The
financial statements are authorized for issue on March 15, 2023. The following subsequent events had occurred:
a. The company had equity investments held for trading. On December 31, 2022, these investments were recorded at
their fair value of P10,000,000. During the period up to February 15, 2023, there was a steady decline in the fair value
of all the shares in the portfolio and on February 15, 2023, the fair value had fallen to P3,000,000.
b. The company had reported a contingent liability on December 31, 2022 related to a court case in which Lumilipad
was the defendant. The case was not heard until the first week of February 2023. On February 12, 2023, the judge
handed down a decision against Lumilipad Company. The judge determined that Lumilipad was liable to pay
damages totaling P6,000,000.
c. On December 31, 2022, Lumilipad Company had a claim from a customer in the amount of P7,000,000. On January
31, 2023, Lumilipad was advised by the liquidator of the said customer that the customer was insolvent and that
only 10% of the receivable will be paid on April 30, 2023.
Q: What total amount should be reported as “adjusting events” on December 31, 2022?

Problem 3:
OhDiWOW Company is completing the preparation of the draft financial statements for the year ended December
31, 2022. The financial statements are authorized for issue on March 31, 2023.
a. On March 15, 2023, a dividend of P3,500,000 was declared and a contractual profit share payment of P700,000 was
made, both based on the profit for the year ended December 31, 2022.
b. On February 1, 2023, a customer went into liquidation having owed the company P680,000 for the past 6 months.
No allowance had been made against this debt in the draft financial statements.
c. On March 20, 2023, a manufacturing plant was destroyed by fire resulting in a financial loss of P5,200,000.
Q: What total amount should be recognized in profit or loss for the year ended December 31, 2022 to reflect adjusting events
after the end of the reporting period?
Situational: FS Authorization Date
The preparation of the financial statements of BGC Company for the year ended December 31, 2022 was completed
on March 15, 2023. The draft financial statements were considered at the meeting of the board of directors held on March
20, 2023, on which date the board approved and authorized them for issuance The annual general meeting was held on April
10, 2023. On the same date, the shareholders approved the financial statements. The approved financial statements were
filed by the company with the SEC on April 20, 2023.
Q: Given these facts, what is the financial statements authorization date in accordance with IAS 10?
A. March 15, 2023
B. March 20, 2023
C. April 10, 2023
D. April 20, 2023

Suppose the management of BGC Company was required to issue the financial statements to a supervisory board
consisting solely of non- executives including representatives of a trade union. The management had issued the draft
financial statements to the supervisory board on March 16, 2023. The supervisory board approved them on March 17, 2023,
and the shareholders approved them in the annual general meeting held on April 10, 2023. The approved financial
statements were filed with the SEC on April 20, 2023.
Q: Given these facts, what is the financial statements authorization date in accordance with IAS 10?
A. March 16, 2023
B. March 17, 2023
C. April 10, 2023
D. April 20, 2023