IAS 10: Events After Reporting Period

IAS 10 is covered in FRK100, therefore, the following work is assumed knowledge and my reflection on what I have learned is a revision of 2017.

What I have learned:

The definition according to paragraph 3 in the Standard for events after reporting period is as follows:

Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Two types of events can be identified:

(a) those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and

(b) those that are indicative of conditions that arose after the reporting period (non-adjusting events after the reporting period).

Important notes that I have gotten from this standard:

  1. During the time between the end of a company’s financial year-end and the date when the financial statements are authorised for the issue, the company does not stop with its activities and operations, therefore, transactions can arise in this time. This Standard leads us to account for these transactions in a specific way.
  2. An adjusting event is for example when a debtor is declared insolvent (the event) during the time from a company’s financial year-end and the date when the financial statements are authorised for issue. This means that at the reporting date (financial year end) of the company, the condition (warning/indicator of the event) that the debtor was going to become insolvent or battling to pay debts, was evident. The financial statements relating to that specific year shall be adjusted accordingly even after the reporting date because it is deemed an adjusting event.
  3. A non-adjusting event is for example when a company receives a penalty from a court case decision (the event) for a particular reason during the time from a company’s financial year-end and the date when the financial statements are authorised for issue. If the entity was only sued (condition) after the reporting period then it is an event that is indicative that the condition arose after the reporting period. The financial statements for the current year shall not be adjusted. A note to disclose this event and condition is required by this Standard so that users can still make effective economic decisions and so that the financial statements are still faithfully represented.

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