Events after the

Reporting Period
(IAS 10)
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and Finance, CoBE, AAU. Permission must be obtained from

Types of events after the

reporting period the broad
principles

Those events, favourable and unfavourable,

that occur between the end of the reporting
period and the date when the FSs are
authorised for issue.

Date of Authorization for issue

The management of an entity completes draft

financial statements for the year to 31 December
20X1 on 28 February 20X2. On 18 March 20X2,
the board of directors reviews and approves the
financial statements. The entity announces its
profit and selected other financial information on
19 March 20X2. The financial statements are
made available to shareholders and others on 1
April 20X2. The shareholders approve the financial
statements at their annual meeting on 15 May
20X2 and the approved financial statements are
then filed with a regulatory body on 17 May 20X2.
What is Date of Authorization for issue?
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Types of events after the

reporting period the broad
principles

Adjusting eventsthose that provide

evidence of conditions that existed at
the end of the reporting period

adjust the amounts recognised in financial

statements

Non-adjusting eventsthose that are

indicative of conditions that arose after
the end of the reporting period

do not adjust the amounts recognised in its

financial statements; disclose the nature of
the event and its financial effect

Event after the reporting period:

what do you think?

On 15 March 2016 when the entitys financial

statements were authorised for issue, the spot
exchange rate = ETB22:$1.

At 31 December 2015 the spot exchange rate =

ETB21:$1.

At what amount must the entity (functional currency =

ETB) measured its $100 million unhedged
noncurrent liability in its 31 December 2015
statement of financial position?
Choose one of:
1)

ETB2,100 million (non-adjusting event)

2)

ETB2,200 million (adjusting event)

Event after the reporting period:

what do you think?

ABEBA Ltd. decided to operate a new Ethanol

Manufacturing Unit that will cost ETB1 million to
build in the year 2005. Its financial year-end is
December 31, 2005. ABEBA Ltd. has applied for a
letter of guarantee for ETB700,000 to import
machineries and equipment. The letter of guarantee
was issued on March 31, 2006. The audited financial
statement have been authorized to be issued on
April 18, 2006.
The adjustment required to be made to the FSs for
the year ended December 31, 2005, should be:

a)
b)

c)
d)

Booking a ETB700,000 long-term payable.

Disclosing ETB700,000 as a contingent liability in
2005 financial statement.
Increasing the contingency reserve by ETB700,000.
Do nothing.

Event after the reporting period:

what do you think?

Excellent Inc. built a new factory building

during 2005 at a cost of ETB20 million. At
December 31, 2005, the net book value of the
building was ETB19 million.
Subsequent to year-end, on March 15, 2006,
the building was destroyed by fire and the
claim against the insurance company proved
futile because the cause of the fire was
negligence on the part of the caretaker of the
building. If the date of authorization of the FSs
for the year ended December 31, 2005, was
March 31, 2006.

Event after the reporting period:

what do you think?

Event after the reporting period:

what do you think?

On December 31, 2005 Excellent Inc. should

a) Write off the net book value to its scrap
value because the insurance claim would
not fetch any compensation.
b) Make a provision for one-half of the net book
value of the building.
c) Make a provision for three-fourths of the net
book value of the building based on
prudence.
d) Disclose this non-adjusting event in the
footnotes.

Event after the reporting period:

what do you think?

At the balance sheet date, December 31, 2015,

ABC Inc. carried a receivable from XYZ, a major
customer, at ETB10 million. The authorization
date of the financial statements is on February
16, 2016. XYZ declared bankruptcy on February
14, 2016.

Event after the reporting period:

what do you think?

ABC Co. will:

a) Disclose the fact that XYZ has declared
bankruptcy in the footnotes.
b) Make a provision for this postbalance sheet
event in its financial statements (as opposed
to disclosure in footnotes).
c) Ignore the event and wait for the outcome of
the bankruptcy because the event took place
after the year-end.
d) Reverse the sale pertaining to this receivable
in the comparatives for the prior period and
treat this as an error under IAS 8.

Many Thanks!

Many Thanks!

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