Events after the reporting

period

Khalid Mahmood bajwa - FCMA 1

Adjusting event after reporting period
Definition: Events providing evidence of conditions that
existed at reporting date

Recognition: An entity shall adjust the amounts

recognized in its financial statements to reflect
adjusting events after the reporting period.

Examples:
1) Bad debts.
2) NRV loss.
3) Determination of cost of asset after the reporting
period.
4) The discover of fraud or errors.
5) Determination of amount of profit-sharing or bonus
payments after the reporting period.
6) Settlement of court Khalid
casesMahmood
after the
bajwareporting
- FCMA period. 2
Non-adjusting events after the
reporting period
Definition: Events indicative of conditions that
arose after reporting period.

Recognition: An entity shall not adjust the

amounts recognized in its financial statements
to reflect non-adjusting events after the
reporting period.
But if events are material then entity shall
disclose the following:
a) The nature of the event
b) An estimate of financial impact

Khalid Mahmood bajwa - FCMA 3

 Examples of non-adjusting events
requiring disclosure:
After the reporting period:
 A major business combination or disposing of major
subsidiary.
 Announcing a plan to discontinue an operation.
 Major purchase of assets, classification of assets as held
for sale in accordance with IFRS-5.
 The destruction of a major production plant.
 Announcing, or commencing major restructuring
 Major ordinary/ potential ordinary share transactions.
 Abnormally large changes in assets price.
 Change in tax rates or tax laws
 Entering into significant commitments or contingent
liabilities.
 Commencing major litigation arising.
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Dividends
If an entity declares dividends after the
reporting period, the entity shall not recognize
those dividends as a liability at the end of the
reporting period.

Such dividends are disclosed in the notes in

accordance with IAS-1 Presentation of Financial
Statements.

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Going concern
An entity shall not prepare its financial
statements on a going concern basis if
management determines after 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.

(Rule of existence of condition at reporting date

not prevail here.)

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Classification of events
Events after the
reporting period

Condition existed at Condition NOT existed at

reporting period. reporting period.
Adjusting Events Non-adjusting Events

Material: Immaterial:

Disclose: Do nothing

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