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IFRS IAS 10 Events after the Balance Sheet Date

IFRS IAS 10 Events after the Balance Sheet Date: It is an international financial reporting standard adopted by the International Accounting Standards Board (IASB). It contains requirements for when events between the end of the reporting period and the date on which the financial statements are authorised for issue should be reflected in the financial statements.

The principal factor for determining if an event is an adjusting event—and hence requiring adjustment in the financial statements—is whether the event provided evidence of conditions existing at the end of the reporting period. Non-adjusting events need also be disclosed where material.

IAS 10 (titled Events After the Balance Sheet Date) was issued in May 1999 by the International Accounting Standards Committee, the predecessor to the IASB. It was reissued by the IASB in December 2003 and retitled Events After the Reporting Period in September 2007 as a consequential amendment resulting from revisions to IAS 1 Presentation of Financial Statements.

IFRS IAS 10 Events after the Balance Sheet Date

IFRS IAS 10 Events after the Balance Sheet Date

IFRS IAS 10 Events after the Balance Sheet Date:

Overview

Usually, a period of time elapses between the balance sheet date and the date on which the financial statements are authorised for issue. This is the period during which the prepares are finalising the financial statements.

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Events which occur during the period can be either adjusting or non-adjusting events.

Adjusting events are those that provide evidence of conditions that existed at the end of the reporting period.Examples include the bankruptcy of a customer that occurs after year end which confirms the non-recoverability of a trade receivable or determination after year end of the cost of assets purchased, or the proceeds from assets sold, before year end.

Non-adjusting events are those that are indicative of conditions that arose after the reporting period.For example, announcing a plan to discontinue an operation after the year end, or the decline in market value of investments after year end.These events do not relate to the condition at the end of the reporting period, but reflects circumstances that have arisen subsequently.

IFRS IAS 10 Events after the Balance Sheet Date:

Recognition and measurement

IAS 10 requires an entity to adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period.For instance, the settlement after the reporting period of a court case that confirms that the entity had a present obligation at the end of the reporting period. The bankruptcy of a customer who owed a debt to the entity at the balance sheet date usually confirms the loss of the debt. Sale of goods after the reporting period may also give evidence about their net realisable value at the balance sheet date.

IFRS IAS 10 Events after the Balance Sheet Date

IAS 10 Events after the Reporting Period as issued at 1 January 2012. Includes IFRSs with an effective date after 1 January 2012 but not the IFRSs they will replace. This extract has been prepared by IFRS Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards. The objective of this Standard is to prescribe:

  1. When an entity should adjust its financial statements for events after the reporting period; and
  2. The disclosures that an entity should give about the date when the financial statements were authorised for issue and about events after the reporting period.

IFRS IAS 10 Events after the Balance Sheet Date: The Standard also requires that an entity should not prepare its financial statements on a going concern basis if events after the reporting period indicate that the going concern assumption is not appropriate. 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:

  1. Those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and
  2. Those that are indicative of conditions that arose after the reporting period. An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period.

IFRS IAS 10 Events after the Balance Sheet Date: An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the reporting period. If non-adjusting events after the reporting period are material, non-disclosure could influence the economic decisions of users taken on the basis of the financial statements. Accordingly, an entity shall disclose the following for each material category of non-adjusting event after the reporting period:

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  1. The nature of the event
  2. An estimate of its financial effect, or a statement that such an estimate cannot be made. If an entity receives information after the reporting period about conditions that existed at the end of the reporting period, it shall update disclosures that relate to those conditions, in the light of the new information.

IFRS IAS 10 Events after the Balance Sheet Date

History of IAS 10

July 1977 Exposure Draft E10 Contingencies and Events Occurring After the Balance Sheet Date
October 1978 IAS 10 Contingencies and Events Occurring After the Balance Sheet Date effective 1 January 1980
1994 IAS 10 (1978) was reformatted
August 1997 Exposure Draft E59 Provisions, Contingent Liabilities and Contingent Assets
September 1998 IAS 37 Provisions, Contingent Liabilities and Contingent Assets
1 July 1999 Effective date of IAS 37, which superseded those portions of IAS 10 (1978) dealing with contingencies
November 1998 Exposure Draft E63 Events After the Balance Sheet Date
May 1999 IAS 10 (1999) Events After the Balance Sheet Date superseded those portions of IAS 10 (1978) dealing with events after the balance sheet date
1 January 2000 Effective date of IAS 10 (1999)
18 December 2003 Revised version of IAS 10 issued by the IASB
1 January 2005 Effective date of IAS 10 (Revised 2003)
6 September 2007 Retitled Events after the Reporting Period as a consequential amendment resulting from revisions to IAS 1

IFRS IAS 10 Events after the Balance Sheet Date

If an entity’s management decides after the reporting period to liquidate the entity or to cease trading, or that it has no alternative but to do so—the entity is no longer a going concern—IAS 16 considers this effect so pervasive that a fundamental change in basis of accounting would be required. In such instances, an entity shall not prepare its financial statements on a going concern basis.

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