IAS 10 prescribes the accounting treatment and disclosures required for events that occur after the balance sheet date but before financial statements are authorized for issue. It distinguishes between adjusting events that provide evidence of conditions that existed at the balance sheet date and non-adjusting events that are indicative of conditions that arose after that date. Financial statements must be adjusted for subsequent adjusting events, but not for non-adjusting events, although the latter may need to be disclosed. The standard also addresses the assessment of going concern and specifies certain additional disclosures required regarding the authorization date of the financial statements and material post-balance sheet date events or conditions.

1. EVENTS AFTER THE BALANCE SHEET DATE
IAS 10 1
3/22/2009

2. Prescribe adjustments and disclosures

required for events that occur after the
balance sheet date but before financial
statements are authorised for issue
To state that financial statements should not

be prepared on the going concern basis if
events after the balance sheet date indicate
that it is no longer a going concern
IAS 10 2
3/22/2009

3. Events after the balance sheet date:

◦ Occur between balance sheet date and date
authorised for issue
◦ Adjusting events: Provide evidence of conditions
that exist at the balance sheet date
◦ Non-adjusting events: Indicate conditions that
arose after the balance sheet date
◦ Date of authorisation: Date accounts are issued to
shareholders, not the date of approval by
shareholders or supervisory board regardless of
public announcements
IAS 10 3
3/22/2009

4. Events that happen
Confirmation of existence of the


following at the balance sheet
after balance sheet
date are adjusted:
date may require
◦ Liability at settlement of court case
◦ Disclosed contingent liability (IAS 37)
disclosure but are no
◦ Impaired asset or that impairment
loss should be reversed
adjusted e.g.:
◦ Bankruptcy of customer with trade
receivable balance
◦ Decline in market value of
◦ Sale of inventories to confirm NRV
investments
◦ Discovery of fraud or errors
◦ Confirmation of cost of asset
◦ Dividends declared after
purchased or proceeds at sale
balance sheet date do not
◦ Bonus accrual out of legal or
constructive obligation
meet present obligation
criteria of IAS 37 (disclose
in notes per IAS 1)
Adjusting events Non-adjusting events
IAS 10 4
3/22/2009

5. Do not prepare financial statements on a

going concern basis if management decides
to liquidate or cease trading , or has no
realistic alternative but to do so, after the
balance sheet date
Follow IAS 1 disclosures for

◦ FS not prepared on going concern basis
◦ Material uncertainties or significant doubt about
ability to continue as a going concern
IAS 10 5
3/22/2009

6. Date when financial statement are authorised for issue

Person who gave authorisation

If anyone has the power to amend financial statements after issue

Disclosures about conditions at balance sheet date must be updated

(e.g. contingent liabilities)
Material non-adjusting events:

◦ Nature of event
◦ Estimate of financial effect or statement that estimate cannot be made
IFRS 3 major business combination

Plan to discontinue an operation

Major asset purchases or sales

Classification of major asset held for sale per IFRS 5

Major destruction by fire

Major restructuring (IAS 37)

Major ordinary share transaction (IAS 33)

Abnormal changes in foreign exchange rates or asset prices

Changes in tax rates of major deferred tax assets and liabilities (IAS 12)

Commitments, contingent liabilities and significant guarantees

Commencing major litigation

IAS 10 6
3/22/2009

7. Financial statements are adjusted for events that

occur after the balance sheet date that confirm
conditions that exist at the balance sheet date
Financial statements are not adjusted for events that

confirm conditions that occurred after the balance
sheet date, but if material, they are disclosed
If an entity ceases to be a going concern due to

events after the balance sheet date, the financial
statements are not prepared on the going concern
basis
No adjustments are made after the financial

statements are authorised for issue to shareholders
or supervisory boards, and this date is disclosed
IAS 10 7
3/22/2009