Topic 7 -Events after the Reporting Period (PAS 10)

PAS 10 Events After The Reporting Period contains requirements for

when events after the end of the reporting period should be adjusted
in the financial statements.
Adjusting events are those providing evidence of conditions existing at
the
end of the reporting period, whereas non-adjusting events are indicative
of conditions arising after the reporting period (the latter being disclosed
where material).
PAS10 prescribes the accounting for and disclosure of events after the
reporting period, including disclosures regarding the date when the
financial statements were authorized for issue.
Events after the Reporting Period
Events after the reporting period are those events, favorable and
unfavorable, that occurs between the end of the reporting period and
the date when the financial statements are authorized for issue.
For example, Entity A reporting period ends on December 31, 2017
and its financial statements are authorized for issue on March 31,
2018.
Events after the reporting period are those events that occur within
January 1, 2018 to March 31, 2018.
The date of authorization of the financial statements is the date when
management authorizes the financial statements for issue regardless
of whether such authorization is final or subject to further approval.
 Two types of events after the reporting period:
1. Adjusting events after the reporting period – are events that
provide evidence of conditions that existed at the end of the
reporting period
2. Non-adjusting events after the reporting period – are events that
are indicative of condition that arose after the reporting period.
Adjusting events after the reporting period
Adjusting events as the name suggests, require adjustments of
amounts in the financial statements.
Examples of adjusting events:
a. The settlement after the reporting period of a court case that
confirm that the entity has a present obligation at the end of the
reporting period.
b. The receipt of information after the reporting period indicating
that an asset was impaired at the end of reporting period.
Examples:
i. The bankruptcy of a customer that occurs after the
reporting period may indicate that the carrying amount
of a trade receivable at the end of the reporting period
is impaired.
ii. The sale of inventories after the reporting period may
give evidence to their net realizable value at the end of
the reporting period.
c. The determination after the reporting period of the cost of asset
purchased, or the proceeds from asset sold, before the end of
reporting period.
 d. The determination after the reporting period of the amount of
profit- sharing or bonus payments, if the entity had a present
legal or constructive obligation at the end of reporting period to
make such payments.
e. The discovery of fraud or errors that indicate the financial
statements are incorrect.
Non-adjusting events after the reporting period
Non-adjusting events do not require adjustments of amounts in the
financial statements. However, they are disclosed if they are material.
Examples of non-adjusting events:
a. Changes in fair values, foreign exchange rates, interest rates or
market prices after the reporting period.
b. Casualty losses (e.g., fire, storm, or earthquake ) occurring after
the reporting period but before the financial statements were
authorized for issue.
c. Litigation arising solely from events occurring after the
reporting period.
d. Significant commitments or contingent liabilities entered after
the reporting period, e.g., significant guarantees.
e. Major ordinary share transactions and potential ordinary share
transactions after the reporting period.
f. Major business combination after the reporting period .
g. Announcing or commencing the implementation of a major
restructuring after the reporting period.
h. Announcing a plan to discontinue an operation after the
reporting period.
i. Change in tax rate enacted after the reporting period.
j. Declaration of dividends after the reporting period.
Dividends
Dividends declared after the reporting period are not recognized as
liability at the end of reporting period because no present obligation
exists at the end of reporting period.

Going Concern
Pas 10 prohibits the preparation of financial statement on a going
concern basis if management determines after the reporting period
either that it intends to liquidate the entity or to cease trading, or that
it has no realistic alternative but to do so.