Scribd
Upload
1K views3 pages

C12 - PAS 10 Events After The Reporting Period

The document discusses events after the reporting period, including: - Adjusting events provide evidence of conditions at the end of the reporting period and require adjusting financial statements, like legal settlements confirming liabilities. - Nonadjusting events indicate conditions after the period and require disclosure only, like new business combinations. - Examples of each type of event are provided. Financial statements are authorized for issue when the board of directors reviews and approves them.

Uploaded by

Allaine Elfa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
1K views3 pages

C12 - PAS 10 Events After The Reporting Period

The document discusses events after the reporting period, including: - Adjusting events provide evidence of conditions at the end of the reporting period and require adjusting financial statements, like legal settlements confirming liabilities. - Nonadjusting events indicate conditions after the period and require disclosure only, like new business combinations. - Examples of each type of event are provided. Financial statements are authorized for issue when the board of directors reviews and approves them.

Uploaded by

Allaine Elfa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

CHAPTER 12: PAS 10 Events After the Reporting Period

Events After Reporting Period

PAS 10, paragraph 3, defined events after the reporting period as those events, whether favorable or
unfavorable, that occur between the end of reporting period and the date on which the financial
statements are authorized for issue.

Types of Events After the Reporting Period

a. Adjusting events after the reporting period are those that provide evidence of conditions that
exist at the end of reporting period.
b. Nonadjusting events after the reporting period are those that are indicative of conditions that
arise after the end of reporting period.

Example of Adjusting Events

Examples of adjusting events after the reporting period which require the entity to adjust the financial
statement are:

1. Settlement after the reporting period of a court case because it confirms that the entity had a
present obligation at the end of reporting period.
2. Bankruptcy of a customer which occurs after the reporting period.
3. Sale of investments after the reporting period may give evidence about the net realizable value
at reporting date.
4. The determination after the reporting period of the cost of assets purchased or the proceeds
from assets sold before the end of reporting period.
5. The determination after the reporting period of the profit sharing or bonus payment if the entity
has the present obligation at the end of reporting period to make such payment.
6. The discovery of fraud or errors that show the financial statements were incorrect.

Examples of Nonadjusting Events

1. Business combination after the reporting period.


2. Plan to discontinue an operation.
3. Major purchase and disposal of asset or expropriation of major asset by government.
4. Destruction of a major production plant by a fire after the reporting period.
5. Major ordinary share transactions and potential ordinary share transactions after the reporting
period.
6. Announcing or commencing the implementation of a major restructuring.
7. Abnormally large changes after the reporting period in asset prices or foreign exchange rates.
8. Entering into significant commitments or contingent liabilities, for example, by issuing
guarantees.
9. Commencing major litigation arising solely from events that occurred after the reporting period.
10. Change in tax rate enacted or announced after the end of reporting period that has a significant
effect on current and deferred tax asset and liability.
Financial statements authorized for issue

Financial statements are authorized for issue when the board of directors reviews the financial
statements and authorizes them for issue.
MULTIPLE CHOICE THEORIES

1. The financial statement are authorized for issue

a) When the board of directors reviews the financial statements and authorizes them for issue
b) When the financial statements are made available to shareholders
c) When the shareholders approve the financial statements at their annual meeting
d) When the approved financial statements are filed with a regulatory body

Answer: A

2. Nonadjusting events after the reporting period that require disclosure include all of the following,
except

a) A major business combination after reporting period


b) Announcing a plan to discontinue an operation
c) Expropriation of major asset after the reporting period
d) Destruction of a major production plant by a fire before the end of the reporting period

Answer: D

3. Events after reporting period that provide evidence about conditions that existed at the current year-
end and affect the realizability of accounts receivable should be

a) Discussed only in the management commentary


b) Disclosed only in the notes
c) Used to record an adjustment to doubtful accounts expense
d) Used to record an adjustment to retained earnings

Answer: C

4. Which statement is true regarding events after the end of reporting period?

a) Recognize a loss for all recognized and unrecognized subsequent events in the current year
b) Recognize a gain or loss for any recognized subsequent event in the current year
c) Recognize a loss for a recognizes subsequent event in the financial statements in the year when
the subsequent event occurs
d) Recognize a loss for a recognized subsequent event in the current year financial statements

Answer: D

5. An entity built a new factory building during the current year. Subsequent to the current year-end and
before the financial statements are issued, the building was destroyed by fire and the claim against the
insurance entity proved futile. What should be reported at the current year-end?

a) Write off the carrying amount of the building


b) Make a provision for one-half of the carrying amount of the building
c) Make a provision for the entire carrying amount of the building
d) Disclose this Nonadjusting event in the notes

Answer: D

You might also like