IAS 10

International Accounting Standard 10 Events after the Reporting Period or IAS 10 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.

Structure

The standard is organised as follows (paragraph numbers refer to the current version of IAS 10, including later amendments):

Structure of IAS 10 Events after the Reporting Period
Part Content Paragraphs
General Objective 1
Scope 2
Definitions (adjusting and non-adjusting events) 3–7
Recognition and measurement Adjusting events after the reporting period 8–9
Non-adjusting events after the reporting period 10–11
Dividends 12–13
Going concern 14–16
Disclosure Date of authorisation for issue 17–18
Updating disclosure about conditions at the end of the reporting period 19–20
Non-adjusting events after the reporting period 21–22
Effective date 23 ff.
Withdrawal of IAS 10 (revised 1999) 24

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 preparers are finalising the financial statements.

Events which occur during the period (that is, 'events after the reporting 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.

Events after the reporting period under IAS 10
Adjusting events Non-adjusting events
Definition Events that provide evidence of conditions that existed at the end of the reporting period (para. 3(a)) Events that are indicative of conditions that arose after the reporting period (para. 3(b))
Accounting treatment Amounts recognised in the financial statements are adjusted (para. 8) No adjustment (para. 10); if material, disclosure of the nature of the event and an estimate of its financial effect (para. 21)
Examples Settlement of a court case confirming a present obligation at the end of the reporting period; bankruptcy of a customer confirming that a receivable was impaired; sale of inventories giving evidence about their net realisable value; discovery of fraud or errors (para. 9) Decline in the fair value of investments; major business combination or disposal of a subsidiary; announcement of a plan to discontinue an operation; destruction of a major production plant by fire; announcement of a major restructuring (paras. 11, 22)

Dividends declared after the reporting period are not recognised as a liability at the end of the reporting period, because no obligation existed at that date (paras. 12–13). Correspondingly, the receiving entity recognises dividend income only when its right to receive payment is established, in accordance with IFRS 9.

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.

An entity shall not adjust the amounts recognised in its financial statements to reflect non-adjusting events after the reporting period. Nonetheless, if the event is material—that is, it could influence the economic decisions made by users of the financial statements—an entity must disclose the nature of the event and an estimate of its financial effect (or state that such an estimate cannot be made). Examples of material non-adjusting events include a major acquisition or disposal of an asset of subsidiary, discontinuing an operation, destruction of a major production plant by fire, announcement or implementation of a major restructuring and commencing major litigation arising solely out of events that occurred after the reporting period.

Dividends declared after the reporting period shall also not be recognised as a liability at the end of the reporting period because no obligation exists at that time.

Going concern

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.

Notes

  1. 1 2 IAS Plus
  2. ↑ "IAS 10 Events after the Reporting Period". IFRS Foundation. Retrieved 10 November 2026.
  3. 1 2 PwC Inform
  4. ↑ IAS 10.3(a)
  5. ↑ IAS 10.9
  6. ↑ IAS 10.3(b)
  7. 1 2 IAS 10.11
  8. 1 2
  9. ↑ IAS 10.8
  10. ↑ IAS 10.9(a)
  11. ↑ IAS 10.9(b)
  12. ↑ IAS 10.10
  13. ↑ IAS 10.21
  14. ↑ IAS 10.22
  15. ↑ IAS 10.12-13
  16. ↑ IAS 10.14-15

References

  1. "Events after the reporting period and financial commitments (IAS 10)". PwC Inform. PwC. Retrieved 2013-09-25.
  2. "IAS 10 — Events After the Reporting Period". IAS Plus. Deloitte. Retrieved 2013-09-25.
  3. International Accounting Standards Board (2011). "IAS 10 Events after the Reporting Period". International Financial Reporting Standards: required for annual periods beginning on 1 January 2012. London: IFRS Foundation. ISBN 9781907877360.