IAS 10 Events after the reporting period


IAS 10 sets the rules when an entity should adjust its financial statements for events after the reporting period together with the necessary disclosures.  It defines both adjusting and non-adjusting events.

Event after the reporting period is favorable or unfavorable event that occurs between the end of the reporting period and the date that the financial statements are authorised for issue.

There are two types of events after the reporting period:

  • Adjusting events
  • Non-adjusting events

Adjusting events

Adjusting event is the event that arose after the end of the reporting period, but provides further evidence of conditions that existed at the end of the reporting period.

Accounting treatment: An entity shall adjust the amounts recognised in its financial statements and/or relevant disclosures to reflect such events.

Examples of adjusting events include:

  • Events that indicate that the going concern assumption in relation to the whole or part of the entity is not appropriate;
  • Settlements after reporting date of court cases that confirm the entity had a present obligation at reporting date;
  • Receipt of information after reporting date indicating that an asset was impaired at reporting date
  • Bankruptcy of a customer that occurs after reporting date that confirms a loss existed at reporting date on trade receivables
  • Sales of inventory after reporting date that give evidence about their net realisable value at reporting date
  • Discovery of fraud or errors that show the financial statements are incorrect.

Non-adjusting event

Non-adjusting event is an event after the reporting period that indicates conditions arising after the end of the reporting period.

Accounting treatment: An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the reporting period. The following disclosure shall be made:

  • The nature of the event, and
  • An estimate of its financial effect or a statement that such an estimate cannot be made.

Examples of non-adjusting events that would generally result in disclosure include

  • Major business combinations or disposal of a major subsidiary
  • Major purchase or disposal of assets, classification of assets as held for sale or expropriation of major assets by government
  • Destruction of a major production plant by fire after reporting date
  • Announcing a plan to discontinue operations
  • Major ordinary share transactions
  • Changes in tax rates or tax law