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