IV Semester M.Com

1. Events After the Reporting Period
Ind AS - 10
Mr. Sathish. V
Assistant Professor
PES Institute of Advanced Management Studies
NH-206, Sagar Road, Shivamogga

2. Events After the Reporting Period (Ind AS 10)
OBJECTIVE
There will always be a time delay between the end of the reporting
period and the date on which the financial statements are authorized for
issue. During the delay, there will almost certainly be events that will
take place and the question arises as to how those events should be
accounted for in the financial statements. Some of these events might
indicate the need for adjustments to the amounts recognized in the
financial statements or require disclosure. Ind AS 10 addresses the effect
of such events on the information that is provided in the financial
statements.

3. SCOPE OF THE STANDARD
IAS 10 should be applied in the accounting for and disclosure of events after the
reporting period. Events after the reporting period are those events, favorable and
unfavorable, that occur between the end of the reporting period and the date when the
financial statements are authorized for issue. This standard prescribes the appropriate
accounting treatment for such events and whether adjustments or simple disclosure is
required. This standard also requires that an entity should not prepare its financial
statements on a going-concern basis if events after the reporting period indicate that the
going-concern assumption is not appropriate.(Accrual basis of Accounting-Entering the
Expenses when its occurred).
KEY CONCEPTS
Events after the reporting period are those events that: provide evidence of conditions
that existed at the end of the reporting period (that is, the origin of the event is in the
current reporting period) and are adjusting events; and are indicative of conditions that
arose after the reporting period and are no adjusting events.

4. ACCOUNTING TREATMENT :
Amounts recognized in the financial statements of an entity are adjusted for
events occurring after the reporting period that provide additional information about
conditions existing at the end of the reporting period, and therefore allow these
amounts to be estimated more accurately.
For example, adjustments could be required for a loss recognized on a trade debtor
that is confirmed by the bankruptcy of a customer after the reporting period.
If events occur after the reporting period and the events do not affect the condition of
assets and liabilities at the end of the reporting period, no adjustment is required.
However, disclosure should be made of such events if they are of such importance that
nondisclosure would affect decisions made by users of the financial statements.
For example, it should be disclosed if an earthquake destroys a major portion of the
manufacturing plant of the entity after the reporting period or an event were to alter
the current or noncurrent classification of an asset at the end of the reporting period,
as per IAS 1 (Presentation of financial statements).

5. Dividends or a liability for dividend should only be recognized if appropriately declared
and authorized and thus are no longer at the discretion of the entity. Dividends that are
proposed or declared after the end of the reporting period but before the approval
of the financial statements should not be recognized as a liability at the end of the
reporting period but should be disclosed in the notes to the financial statements.

6. PRESENTATION AND DISCLOSURE :
Disclosure requirements related to the date of authorization for issue are as follows:
■ The date when financial statements were authorized for issue;
■ The name of the person who gave the authorization; and
■ The name of the party (if any) with the power to amend the financial statements after
issuance.
For non adjusting events that would affect the ability of users to make proper
evaluations and decisions, the following should be disclosed:
■ The nature of the event;
■ An estimate of the financial effect; and
■ A statement if such an estimate cannot be made.
Disclosures that relate to conditions that existed at the end of the reporting period
should be updated in light of any new information about those conditions that is
received after the reporting period.

7.  EXAMPLE: EVENTS AFTER THE REPORTING PERIOD EXAMPLE
Example 1
Entity WIPRO exports a certain component to a manufacturer based in a foreign
country. This foreign manufacturer uses this component supplied by Entity WIPRO in
order to produce widgets. At the end of its reporting period (June 2018), Entity WIPRO
has unusually high levels of stock due to lower-than-expected orders from its foreign
manufacture. On August 15, 2018, before the financial statements of Entity WIPRO are
authorized for issue, the government of the country where the manufacture is based
announces that the components supplied by Entity WIPRO will only be procured within
the country of the manufacturer (that is, the components will not be imported but
instead will be acquired locally). Entity WIPRO does not have any alternative markets
for the components. Is the announcement by the government an adjusting or a non
adjusting event?

8. • EXPLANATION
The announcement by the government of the foreign country to
impose restrictions on imports of the components supplied by Entity
WIPRO is an adjusting event because it provides evidence of the
conditions that existed at the end of the reporting period. The
unusually high levels of inventory at the end of the reporting period
indicated low demand. The announcement by the government
confirmed that the inventory should be written down as there is no
demand for it.

9. EXAMPLE 2
A corporation with a financial year end of June 30 has an amount of $20 million that is
due from Debtor A as of June 30, 2018. The corporation provided for impairment on
June 30, 2018 of $5 million against the gross value of $20 million due from Debtor A.
On July 31, 2018, before the financial statements were authorized for issue, Debtor A
goes bankrupt and files for protections from its creditors. Is Debtor A’s bankruptcy and
filing for protection from its creditors an adjusting or non adjusting event?
EXPLANATION :
The bankruptcy and filing for protection from its creditors of Debtor A after the end of
the reporting period provides evidence of the fact that the amount receivable from
Debtor A was impaired at the end of the reporting period. This is an adjusting event
and the corporation should impair the amount receivable from Debtor A as of June 30,
2018.

10. EXAMPLE 3
Shortly after its financial year end of June 30, 2017, but before
the financial statements are authorized for issue, Entity B’s
inventory was destroyed by a fire which resulted in a loss of
$2 million. Is this event an adjusting or a non adjusting event?

11. • EXPLANATION
This event is a non adjusting event as it is indicative of a
condition (fire) that arose after the end of the reporting period.
Because this is a non adjusting event, no adjustments will be
made to the amounts recognized in the financial statements of
Entity B’s for the year ending June 30, 2018. However, if the
loss of $2 million is consequential enough that its
nondisclosure would influence the economic decisions of the
users of financial statements, disclosure of the nature of the
event, the estimate of its financial effect, or a statement if such
an estimate cannot be made, would be required.

12. EXAMPLE 4
There is a Fraud in the purchase raw materials and supplier is a part of the
ordinary activities of the company. Money has been advanced but materials were
not delivered, the disputed amounts was accounted for as advance against
supplier.
An enquiry committee has been formed before the balance sheet date. The
committee submitted the report after the reporting date but before the
authorization of FS. and the reporting reveals that the advance has been given to a
facilitator foreign party who is no longer traceable .the company is in the process
of collecting future evidence about prospective supplier.
Hence how should co accounts for the advance made ? And is it an adjusting or
Non adjusting event ?

13. • Explanation :
Its an adjusting event reporting after date. the money has been
advanced and committee has been formed ,hence this shows there is
an evidence and the supplier is no more traceable. and the company
need to maintain 100% provision towards the it in the FS.

14. Summary
Event after the reporting period: An event, which could be favorable
or unfavorable, that occurs between the end of the reporting period and
the date that the financial statements are authorized for issue.
Adjusting event: An event after the reporting period that provides
further 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.
Non-adjusting event: An event after the reporting period that is
indicative of a condition that arose after the end of the reporting period.

15. • Accounting
Adjust financial statements for adjusting events - events
after the balance sheet date that provide further evidence of
conditions that existed at the end of the reporting period.
Do not adjust for non-adjusting events - events or conditions
that arose after the end of the reporting period.
- If an entity declares dividends after the reporting period,
the entity shall not recognize those dividends as a liability at
the end of the reporting period. That is a non-adjusting
event.

16. • Disclosure
• Non-adjusting events should be disclosed if they are of such
importance that non-disclosure would affect the ability of users to
make proper evaluations and decisions.
• The required disclosure is (a) the nature of the event and (b) an
estimate of its financial effect or a statement that a reasonable estimate
of the effect cannot be made.
• A company should update disclosures that relate to conditions that
existed at the end of the reporting period to reflect any new
information that it receives after the reporting period about those
conditions.
• Companies must disclose the date when the financial statements were
authorized for issue and who gave that authorization. If the
enterprise's owners or others have the power to amend the financial
statements after issuance, the enterprise must disclose that fact.