Which of the following is not an adjusting event after the reporting period?

In April 2001 the International Accounting Standards Board (Board) adopted IAS 10 Events After the Balance Sheet Date, which had originally been issued by the International Accounting Standards Committee in May 1999. IAS 10 Events After the Balance Sheet Date replaced parts of IAS 10 Contingencies and Events Occurring After the Balance Sheet Date (issued in June 1978) that were not replaced by IAS 37 Provisions and Contingent Assets and Contingent Liabilities (issued in 1998).

In December 2003 the Board issued a revised IAS 10 with a modified title—Events after the Balance Sheet Date. This revised IAS 10 was part of the Board’s initial agenda of technical projects. As a result of the changes in terminology made by IAS 1 Presentation of Financial Statements in 2007, the title of IAS 10 was changed to Events after the Reporting Period.

Other Standards have made minor consequential amendments to IAS 10. They include IFRS 13 Fair Value Measurement (issued May 2011), IFRS 9 Financial Instruments (issued July 2014) and Definition of Material (Amendments to IAS 1 and IAS 8) (issued October 2018).

IAS 10 Events after the Reporting Period prescribes when an entity should adjust its financial statements for events after the reporting period and the disclosures that an entity should give about the date when the financial statements were authorised and about events after the reporting period.

Revised December 2003. Effective 1 January 2005.

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Synopsis

Events occurring between the reporting date and the date on which the financial statement are authorised for issue should be classified as either adjusting or non-adjusting events.

• Adjusting events provide further evidence of conditions that existed at the reporting date, and result in adjustment to the financial statements.
• Non-adjusting events are indicative of a condition that arose after the end of the reporting period and do not result in adjustment to the financial statements. They should be disclosed if of such importance that non-disclosure would affect the ability of the users to make proper evaluations and decisions.
• Where events after the reporting period indicate that the going concern assumption is not appropriate, these are adjusting events.
• A dividend declared after the reporting period is a non-adjusting event.

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Event after the reporting period: An event, which could be favourable or unfavourable, that occurs between the end of the reporting period and the date that the financial statements are authorised for issue. [IAS 10.3]

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. [IAS 10.3]

Non-adjusting event: An event after the reporting period that is indicative of a condition that arose after the end of the reporting period. [IAS 10.3]

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, including events that indicate that the going concern assumption in relation to the whole or part of the enterprise is not appropriate. [IAS 10.8]
• Do not adjust for non-adjusting events - events or conditions that arose after the end of the reporting period. [IAS 10.10]
• If an entity declares dividends after the reporting period, the entity shall not recognise those dividends as a liability at the end of the reporting period. That is a non-adjusting event. [IAS 10.12]

Going concern issues arising after end of the reporting period

An entity shall not prepare its financial statements on a going concern basis if management determines after the end of 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. [IAS 10.14]

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. [IAS 10.21]

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. [IAS 10.19]

Companies must disclose the date when the financial statements were authorised for issue and who gave that authorisation. If the enterprise's owners or others have the power to amend the financial statements after issuance, the enterprise must disclose that fact. [IAS 10.17]

What are the types of events after the reporting period?

Which of the following events after the reporting period would require disclosure?