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Workbook on IAS 10 EVENTS AFTER THE
REPORTING PERIOD
4. Conditions that arose after the Reporting Period should not adjust
Introduction the financial statements, but should be suitably noted.

Aim

The aim of this workbook is to provide an understanding of IAS 10,
Events after the Reporting Period.
SUMMARY
In most countries, events after the Reporting Period tend to be
recorded in the notes to the financial statements, if at all. Without a
standard framework , the preparation of financial reports have lacked
consistency.
IAS 10 details the post- Reporting-Period events and how they should
be recorded under IFRS.
EXAMPLES- conditions that arose after the Reporting Period
These include major acquisitions and disposals, material changes to
banking facilities financing the bank and new share issues. Such
events should be noted.
If material events occur after the approval of financial statements,
they should be communicated to users in an appropriate manner.
Such events are not covered by IAS 10 as they occur after the
approval of the financial statements.

Post- Reporting-Period events happen during the period starting Objective

immediately after the Reporting Period and ending at the date of
The objective of the Standard is to prescribe adjustments and
approval of the financial statements.
disclosures for events after the Reporting Period.
Establishing the exact date of approval is necessary to comply with
the Standard.
Definitions
There are 4 main types of material post-Reporting-Period events:
The following terms are used in this Workbook:
1. Dividends declared in this period after the Reporting Period, but
before approval of the financial statements should be noted, but
1 Events after the Reporting Period 1

not shown as a liability, at the balance sheet date. Events after the Reporting Period may be favourable or unfavourable.

Two types of events can be identified:

1. Adjusting events 1. On 16 February 2XX7, the bank announces its profit and
selected other financial information. .
Adjusting events are those events that arise after the Reporting
Period, but before approval, that require the balance sheet to be
amended.
1. On 19 March 2XX7, the financial statements are made available
2. Non-adjusting events to shareholders, and others.

Non-adjusting events are conditions that arose after the Reporting

Period.
1. On 24 April 2XX7, the shareholders approve the financial
Approval statements at the annual meeting.

The date of approval is the end of the post-Reporting-Period period.

This date may vary depending on factors such as statutory 1. On 28 April 2XX7, the approved financial statements are then
requirements and the procedures followed in preparing, and filed with a regulatory body
finalising, the financial statements.

Generally when the financial statements are approved by the main

The period for post-Reporting-Period events ends on 10 February
board, this date is the end of the post-Reporting-Period period,
2XX7 (date of board approval for issue).
regardless of subsequent approvals.

EXAMPLE final approval - 1

A bank is required to issue its financial statements to its shareholders EXAMPLE final approval -2

for final approval. The financial statements are approved when the main board approves

In such cases, the financial statements are approved on the date of them for issue to the supervisory board, not when the supervisory

issue, not the date when shareholders approve the financial board gives subsequent approval.

statements.
Supervisory boards usually comprise representatives of shareholders,
workers and other stakeholders in a company. Their role is non-
executive. The management board is accountable to the supervisory
EXAMPLE date of approval - 1 board.

1. On 31 January 2XX7, management of a bank completes draft

financial statements for the year to 31 December 2XX6.

1 EXAMPLE date of approval - 2 1

1. On 10 February 2XX7, the board of directors reviews the
financial statements and approves them for issue. 1. On 12 February 2XX8, the management of bank approves
financial statements for issue to its supervisory board. The
 supervisory board is made up solely of non-executives, and Adjusting Events after the Reporting Period
may include representatives of employees, and other outside
An entity shall adjust the amounts recorded in its financial
interests.
statements, to reflect adjusting events after the Reporting Period.

1. On 23 February 2XX8, the supervisory board approves the

In the following examples, I/B refers to Income Statement and
financial statements.
Balance Sheet (SFP).

EXAMPLE
1. On 14 March 2XX8, the financial statements are made available
confirmation
to shareholders and others.
of obligation

Your

1. On 19 April 2XX8, the shareholders approve the financial entity has

statements at their annual meeting. been sued for

trademark
infringement.
1. On 29 April 2XX8, the financial statements are filed with a You made a
regulatory body. provision of
$1 million for
the lawsuit in
The financial statements are approved for issue on 12 February your financial
2XX8 which is the end of the post-Reporting-Period period.
statements at
31st
December
Events after the Reporting Period include all events up to the date 2XX4 which
when the financial statements are approved for issue, even if those have not yet
events occur after the public announcement of profit, or of other been
selected financial information. approved.

On January
10th 2XX5, the
1 1
court awards
$0,6 million
damages
against your 31st
entity so the December
provision is 2XX4.
adjusted to
On January
$0.6m
14th 2XX5, the

I/B DR CR court awards

$5 million
Provision B 0,4m damages
against legal against your
costs bank.

Legal costs I 0,4m If your

financial
Reduction of
statements
provision
have not been
approved, you
create a
EXAMPLE provision for
crystallisation $5 million in
of liability your financial
statements to
31st
Your December
entity has 2XX4.
been sued for
anticompetitive I/B DR CR

behaviour.
Legal costs I 5m
This has been
denied by Provision B 5m
your entity, against legal
and no costs
provision was
Creation of
made in your
1 1
provision
financial
statements
at
The receipt of information, after the Reporting Period, indicating that If your
an asset wa impaired at the balance sheet date, or that the amount of financial
a previously recorded impairment loss for that asset needs to be statements
adjusted. This will result in an adjusting event. have not been
approved, you
EXAMPLE
reduce the
impairment
carrying
-1
value of the

At 31st part to $0,4

December million in

2XX4, part of your financial

your statements to

computer 31st

system is December

being 2XX4.

repaired. It
I/B DR CR
has a
carrying Depreciation I 1,6m
value of $2
Accumulated B 1,6m
million in
depreciation
your financial
statements. Fixed asset
impairment
provision
On January
16th 2XX5, you
are informed
that the part EXAMPLE impairment -2

is
irreparable,
Management shall adjust the amounts recognised in an entity's
and the scrap
financial statements to reflect adjusting events after the Reporting
value is only
Period. Additionally, it shall update the disclosure related to the
$0,4 million. 1 1

conditions that are clarified in the light of the new events.

Should management recognise a loss in its consolidated financial
EXAMPLE
statements in respect of the sale of a subsidiary after the
existing loss
Reporting Period, where that subsidiary is sold at a loss?
Your
entity has a

Background client that

owes you $8
T’s management is preparing its consolidated financial
million on
statements for the year ended 31 December 2XX2. T disposed of
31st
subsidiary X on 15 February 2XX3, incurring a loss of 700,000,
December
which is material to T. T’s consolidated financial statements are
2XX4.
due to be finalised on 28 February 2XX3.

Management has confirmed that the individual assets held in X

have been reviewed for impairment and no provision for On January

impairment is required in the subsidiary’s single-entity financial 9th 2XX5, your

statements. client goes

into
Management has also confirmed that no other significant events
liquidation.
have occurred since 31 December 2XX2 to cause a reduction in the
You are
value of X. There has therefore been no material change in the
informed that
value of X between year-end and the date of disposal.
you will
receive
nothing from
Solution
the
Yes, management shall adjust the consolidated financial liquidation.
statements because the event provides evidence of conditions that
existed at the balance sheet date.

If your
The subsidiary must already have been impaired by the balance
financial
sheet date, because there has not been a significant event since
statements
then to cause a reduction in the subsidiary’s value. The disposal
have not been
since year-end simply provides evidence of the impairment.
approved, you
Management shall therefore recognise an impairment of the reduce the
1 1
subsidiary in the consolidated financial statements in accordance carrying
with IAS 36. value of
financial
statements had a
receivable by carrying
$8 million in value of $1
your financial million,
statements to following the
31 st recording of
December loan-loss
2XX4 provisions of
$4 million.
I/B DR CR

Accounts B 8m
On February
receivable
8th2XX5,
Bad debt I 8m these loans
provision were sold for
$1,7 million.
Bad debt write
off

If your
financial

EXAMPLE statements

evidence of have not been

realisable approved, you

value increase the

carrying
Your
value of loans
entity has
receivable by
some loans
$0,7 million
receivable
in your
that
financial
originally
statements to
cost $5
31st
million.
December
1 1

At 31st 2XX4.
December
I/B DR CR
2XX4, they
 statements
Loan-loss I 0,7m
for 31st
provision
December
Provision B 0,7m 2XX4, you are
told that
Increasing
profit target
loans
has not been
receivable
met.
carrying value
Therefore you
EXAMPLE produce the
confirmation financial
of value statements to
reflect the
Your
sale proceeds
entity sold a
as $4 million.
subsidiary for
$4 million on
1st January
On January
2XX4. In
28th 2XX5, you
addition, your
learn that the
bank will
profit target
receive $1
had been
million, if the
met, and
business that
therefore you
you sold
are owed $1
reaches its
million more.
profit target
for the year to
31st
December If your
2XX4. financial
statements
have not been
1 1
When
approved, you
preparing
increase the
your financial
sale proceeds
of the statements of
business sold 31st
by $1 million December
in your 2XX4.
financial
statements to
31st On February

December 26th 2XX5,

2XX4. your auditors

confirm the
I/B DR CR bank’s profit.
The resulting
Accounts B 1m
profit-share
receivable
that will be
Profit on I 1m paid in March
disposal 2XX5
amounts to
Increase of
$2,4 million.
sale proceeds

If your

EXAMPLE financial

determination statements

of present have not been

legal, or approved, you

constructive increase

obligation salary costs

by $2,4
Your
million in
entity has a
your financial
profit-
statements to
sharing
31st
system based
December
1 1
on the
2XX4.
audited profit
in the I/B DR CR
financial
 $8 million, as
Salary costs- I 2,4m
part of the
bonuses
fraud.
Accrued B 2,4m
bonuses
If your
Accruing
financial
bonus
statements
have not been
approved, you
EXAMPLE reduce fees
fraud and by $10
error million, and
reduce
Your
expenses by
entity has
$8 million, in
been
your financial
compiling the
statements to
financial
31st
statements of
December
31st
2XX4.
December
2XX4. I/B DR CR

Fee income I 10m

On January
Expenses I 8m
15th 2XX5,
your auditors Accounts B 10m
identify some receivable
fictitious fee
Accounts B 8m
income
payable
totaling $10
million. Corrections of
1 1
Expenses fee income
have also and expenses
been
overstated by
Non-adjusting Events after the Reporting Period
Non-adjusting events require notes to the financial statements. The
financial figures remain unaltered.
An example of a non-adjusting event after the Reporting Period is a
decline in market value of investments, between the balance sheet
and approval date.
The decline in market value does not normally relate to the value of
the investments at the balance sheet date, but reflects circumstances
that have arisen since that time.
EXAMPLE decline in value of investments
Your entity has invested heavily in Far-Eastern stocks that have
performed well in the period to 31st December 2XX4.
On January 14th 2XX5, a series of earthquakes hit the region, causing
major industrial devastation. Stock markets plummet, and remain
very depressed until the date of approval of your financial
statements.
You do not change the figures in your financial statements to 31st
December 2XX4, but note the post-Reporting-Period decline of
investments, and amounts involved.
Dividends
If an entity declares dividends to shareholders after the Reporting
Period, the entity shall not record those dividends as a liability at the
1 1
balance sheet date.
If dividends are declared after the Reporting Period, but before the
financial statements are approved for issue, the dividends are
disclosed in the notes to the financial statements.
EXAMPLE dividends
Your entity has prepared its financial statements for the period to 31st
December 2XX4.
On January 24th 2XX5, your directors declare dividends totaling $7
million.
You do not change the figures in your financial statements to 31st
December 2XX4, but quantify the post-Reporting-Period dividends in
the note on retained earnings.
Going-concern
An entity shall not prepare its financial statements on a going-
concern basis, if management determines after the Reporting Period
either that it intends to liquidate the undertaking, or to cease trading,
or that it has no realistic alternative but to do so.
EXAMPLE
Your bank is preparing its financial statements for the period to 31st
December 2XX4.
On January 4th 2XX5, your directors decide to sell the bank’s assets
and liquidate the bank.
The financial statements to 31st December 2XX4 should be produced
on a liquidation basis, not a going-concern basis.
EXAMPLE
Management shall not prepare the bank’s financial statements on
a going concern basis if it determines after the Reporting Period
Deterioration in operating results and financial position, after the
to liquidate the bank or to cease doing business.
Reporting Period, may indicate a need to consider whether the going
concern assumption is still appropriate.

Should management adjust the bank’s financial statements

because the shareholders decided after the Reporting Period to
If the going-concern assumption is no longer appropriate, IAS 10
cease the bank’s core operations?
requires a fundamental change in the basis of accounting, rather than
an adjustment to the amounts recorded within the original basis of
accounting.

Background
EXAMPLE
Management announced on 5 February 2XX3 its intention to cease
the bank’s core operations. The financial statements were Your entity has a client that owes you $45 million on 31st December
authorised for issue on 19 February 2XX3. 2XX4.

On January 19th 2XX5, your client goes into liquidation. You are
informed that you will receive nothing from the liquidation.
Solution
Your entity is unable to raise funds to recover from this loss, and is
Management shall prepare the bank’s financial statements on a
certain to be liquidated.
liquidation basis rather than on a going concern basis.
The financial statements to 31st December 2XX4 should be produced
on a liquidation basis, not a going-concern basis.
Management shall make an assessment of the bank’s ability to
continue as a going concern when preparing the financial
statements. Although the decision to cease the bank’s core IAS 1 specifies required disclosures if:
operations was made and announced after the Reporting Period,
the financial statements shall be prepared on a basis other than
going concern. (i) the financial statements are not prepared on a going-concern
basis; or

Consequently, the amounts recognised in the bank’s financial 1 1

statements for 31 December 2XX2 shall be adjusted to conform to (ii) management is aware of material uncertainties related to events,

the liquidation basis of accounting. or conditions, that may cast significant doubt upon the undertaking’s
ability to continue as a going-concern.
 ‘These financial statements have been approved for issue by the
Board of Directors on 28 February 2XX5.’ (Note at the foot of the
The events, or conditions, requiring disclosure may arise after the
balance sheet.)
Reporting Period.

If the bank’s owners, or others, have the power to amend the financial
EXAMPLE
statements after issue, the undertaking shall disclose that fact.
Your entity has a client that owes you $85 million on 31 December
st

2XX4.
On January 13th 2XX5, your client goes into liquidation. You are
informed that you will receive nothing from the liquidation.
It is important for users to know when the financial statements were
approved for issue, because the financial statements do not reflect
events after this date.

Updating Disclosure about Conditions at the Balance Sheet

Your entity may be able to raise funds to recover from this disaster,
Date
but is unable to secure any commitment by the date that the financial
statements are to be approved.

If an entity receives information, after the Reporting Period, about

conditions that existed at the balance sheet date (adjusting events), it
The financial statements to 31st December 2XX4 should be produced
shall update disclosures that relate to those conditions, in the light of
on a liquidation basis, not a going-concern basis, due to the
the new information.
uncertainty.

In some cases, an entity needs to update the disclosures in its

financial statements to reflect information received after the
Reporting Period, even when the information does not affect the
Disclosure amounts that it records in its financial statements (non-adjusting
events).

One example of the need to update disclosures is when evidence

Date of Approval for Issue
becomes available, after the Reporting Period, about a contingent
liability that existed at the balance sheet date.
1 1
An entity shall disclose the date when the financial statements were
approved for issue, and who gave that approval.

EXAMPLE
 approved, you
EXAMPLE –
create a
updating
provision for
disclosure
$7 million in
Your entity
your financial
has been
statements to
sued for
31st
anticompetitive
December
behaviour.
2XX4, to
This has been
replace the
denied by
contingent
your bank,
liability.
and there
was only a I/B DR CR

contingent
Legal costs I 7m
liability in
your financial Provision B 7m
statements at against legal
31 st
costs
December
Creation of
2XX4.
provision to
replace

On January contingent

14th2XX5, the liability

court awards
$7 million
damages In addition to considering whether it should record, or change, a

against your provision under IAS 37 Provisions, Contingent Liabilities and

bank. Contingent Assets, a bank updates its disclosures about the

contingent liability in the light of that evidence, by providing
comprehensive notes.
If your
1 1
financial
statements Non-adjusting Events after the Reporting Period

have not been

If non-adjusting events after the Reporting Period are material, non-
disclosure could influence the economic decisions of users taken on
the basis of the financial statements.
To comply, an entity shall disclose the following for each material
category of non-adjusting event after the Reporting Period:
(i) the nature of the event; and
(ii) an estimate of its financial effect, or a statement that such an
estimate cannot be made.
The following are examples of non-adjusting events after the
Reporting Period that would generally result in disclosure:
(i) a major business combination after the Reporting Period, or
disposal of a major subsidiary;
(ii) announcing a plan to discontinue an operation, disposing of
assets, or settling liabilities attributable to a discontinuing operation,
or entering into binding agreements to sell such assets, or settle such
liabilities;
(iii) major purchases and disposals of assets, or expropriation of
major assets by government;
EXAMPLE
‘On January 5th 2XX5, the government announced that a new road
would be built.
This road will result in the destruction of the entity's head office.
Negotiations have started with the government for compensation.
The carrying value of the head office building, and the land on which
it stands was $6,3 million, as at 31st December 2XX4.’
1 1
(iv) the destruction of a major operating unit by a fire after the
balance sheet date;
(v) announcing, or commencing the implementation of, a major
restructuring;
(vi) Provide a description of ordinary share transactions, or potential
ordinary share transactions, that occur after the Reporting Period,
especially those that would have changed significantly the number of
ordinary shares or potential ordinary shares outstanding at the end of
the period if those transactions had occurred before the end of the
reporting period.
EXAMPLE
‘On January 20th 2XX5, the directors were notified that Big Investment
Company had purchased 65% of the ordinary shares of the entity from
Small Investment Company.
Big Investment Company has stated that it wishes to buy the
remaining 35% of the ordinary shares, and intends to notify
shareholders of the terms of the intended purchase over the next 2
months.’
An entity should disclose a description of such transactions,
including when such transactions involve capitalisation, bonus
issues, or share splits (or reverse share splits).
If the number of ordinary or potential ordinary shares outstanding
increases as a result of a capitalisation, bonus issue or share split, or
decreases as a result of a reverse share split, the calculation of basic
and diluted earnings per share for all periods presented shall be
adjusted retrospectively.
If these changes occur after the Reporting Period but before the
financial statements are authorised for issue, the per share
calculations for the reporting period and any prior period financial
statements presented shall be based on the new number of shares.
The fact that per share calculations reflect such changes in the
number of shares shall be disclosed. In addition, basic and diluted
earnings per share of all periods presented shall be adjusted for the
effects of adjustments resulting from changes in accounting policies
accounted for retrospectively.
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EXAMPLE - major guarantees
Certificate in IFR Accounting for

Following the preparation of your financial statements at 31st cryptocurrencies

December 2XX4, but before their approval, your entity agrees to

Interview Website terms of
provide major guarantees to your subsidiary’s correspondent banker,
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in order to renew your facilities on more favourable terms. Interview Questions

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You do not change the figures in your financial statements to 31st
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December 2XX4, but provide details of the guarantees and the assets
provided as security. IFRS Interview Refund Policy
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(x) commencing major litigation arising solely out of events that
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occurred after the Reporting Period.

EXAMPLE –law suit © 2023 Eduyush About us Founders Message Refer & earn Contact us Sitemap

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Following the preparation of your financial statements at 31st
December 2XX4, but before their approval, your entity receives notice
that the government intends to sue the company for $8 million for
anti-competitive behaviour. (At the balance sheet date, your bank had
no reason to anticipate this.)
1 1

You do not change the figures in your financial statements to 31st

December 2XX4, but note the intention of the government.