IAS 10

Overview and Scope

International Accounting Standard 10: Events after the Reporting Period (IAS 10) is an international financial reporting standard adopted by the International Accounting Standards Board (IASB).^[1] It contains requirements for when events occurring between the end of the reporting period and the date on which the financial statements are authorized for issue should be reflected in the financial statements.^[2] The standard distinguishes between adjusting events, which provide evidence of conditions existing at the end of the reporting period, and non-adjusting events, which relate to conditions arising after the period.^[3]

IAS 10 was originally issued in May 1999 and was subsequently retitled in 2007 to align with the revised IAS 1.^[4] The period between the balance sheet date and authorization is crucial as it is the timeframe during which preparers finalize the financial data.^[5]

Adjusting and Non-adjusting Events

Adjusting events require an entity to update the amounts recognized in its financial statements.^[6] Common examples include the settlement of a court case that confirms a present obligation existed at year-end or the bankruptcy of a major customer that confirms a loss on a trade receivable.^[7]

Non-adjusting events do not result in changes to the financial statement amounts but must be disclosed if they are material.^[8] A decline in the market value of investments after the reporting period is a typical non-adjusting event, as it reflects circumstances that arose subsequently.^[9] Materiality is assessed based on whether the information could influence the economic decisions of users.^[10]

Special Considerations

Dividends

If an entity declares dividends after the reporting period, it shall not recognize those dividends as a liability at the end of the reporting period.^[11] Such dividends are disclosed in the notes in accordance with IAS 1.^[12]

Going Concern

An entity shall not prepare its financial statements on a going concern basis if management determines after the reporting period that it intends to liquidate the entity or cease trading.^[13] A deterioration in operating results and financial position after the reporting period may indicate a need to consider whether the going concern assumption is still appropriate.^[14]

Booking Examples for IAS 10

The following examples illustrate the accounting treatment for events occurring after the reporting period.

1. Adjusting Event (Customer Bankruptcy)

Scenario: A company has a receivable of $10,000 at its year-end (Dec 31). In February, before the accounts are authorized, the customer goes bankrupt.

Event	Debit	Credit	Rationale
Recognition of loss	Bad Debt Expense (P&L)	Allowance for Credit Losses	The bankruptcy provides evidence of a condition (insolvency) that existed at year-end.[15]

2. Non-adjusting Event (Fire Damage)

Scenario: In January, a major production plant is destroyed by fire. The carrying amount of the plant was $500,000.

Action	Journal Entry	Rationale
Adjustment of Accounts	None	No entry is made in the year-end financial statements as the fire is a new condition.[16]
Disclosure	Note Disclosure	The nature and financial effect must be disclosed in the notes if material.[17]