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PAS 10 Events After The Reporting Period

1. Type 1 events provide evidence of conditions that existed at the balance sheet date and are disclosed in the notes to the financial statements. Type 2 events indicate conditions that arose after the balance sheet date and are disclosed in the notes. 2. Events after the balance sheet date that do not require adjustment include the determination of asset costs or sale proceeds before the balance sheet date. 3. A dividend declared after the balance sheet date but before the financial statements are authorized for issue is not recognized as a liability at the balance sheet date.

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212 views2 pages

PAS 10 Events After The Reporting Period

1. Type 1 events provide evidence of conditions that existed at the balance sheet date and are disclosed in the notes to the financial statements. Type 2 events indicate conditions that arose after the balance sheet date and are disclosed in the notes. 2. Events after the balance sheet date that do not require adjustment include the determination of asset costs or sale proceeds before the balance sheet date. 3. A dividend declared after the balance sheet date but before the financial statements are authorized for issue is not recognized as a liability at the balance sheet date.

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Van Angelo Escobar Magumun
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Events After the Reporting Period

1. Type 1 events that provide evidence of conditions that existed at the balance sheet date are given the following
treatment:
a. note disclosure only, in the financial statements;
b. recognition in the financial statements;
c. adjustment in the cash flow statement;
d. ratification by shareholders at an annual meeting.

2. Type II events that are indicative of conditions that arose after the balance sheet date are given the following
treatment:
a. recognition in the income statement;
b. recognition in the balance sheet;
c. recognition in the cash flow statement;
d. note disclosure in the financial statements.

3. Events after balance sheet date are events that occur between the balance sheet date and the date on which the
financial statements are authorized for issue. An event after balance sheet date for which an adjustment is not
necessary is;
a. The determination after the balance sheet date of the cost of an asset purchased or the proceeds from assets sold
before the balance sheet date.
b. Sale of inventories after the balance sheet date that may give evidence about the net realizable value at balance
sheet date.
c. Entering into significant commitments or contingent liabilities, for example, by issuing guarantees.
d. Resolution after the balance sheet date of a court case.

4. IAS 10 Events after the Balance Sheet Date, states that if a dividend is declared after the balance sheet date but
before the financial statements are authorised for issue, the dividend is:
a. recognised as a liability at the balance sheet date;
b. not recognised as a liability at the balance sheet date;
c. recorded as a direct reduction of equity at the balance sheet date;
d. recorded as a reduction against the asset ‘cash’ at balance sheet date.

5. ABC company decided to operate a new amusement park that will cost P1 million to build in the year 2005. Its
financial year end is December 31, 2005. ABC company has applied for a letter of guarantee for P700,000. The
letter of guarantee was issued on March 31, 2006. The audited financial statements have been authorized to be
issued on April 18, 2006. The adjustment required to be made to the financial statement of the year ended
December 31, 2005, should be
a. Booking a P700,000 long-term payable
b. Disclosing P700,000 as a contingent liability
c. Increasing the contingency reserve by P700,000
d. Do Nothing

6. Under PAS 10, which of the following statements is true regarding events after reporting period?
I. Adjusting events after reporting period are events that provide evidence of conditions that existed at the end of the
reporting period.
II. Nonadjusting events after reporting period are events that are indicative of conditions that arose after the end of
reporting period.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
7. Adjusting events after reporting period include all of the following, except
a. The settlement of a court case after the issuance of the financial statements that confirms that the entity has
a present obligation.
b. The bankruptcy of a customer which occurs after the reporting period and before issuance of statements resulting
to a loss on a trade receivable account.
c. The discovery of fraud or errors after reporting period and before issuance of statements that show that the
financial statements were incorrect.
d. Determination after the reporting period and before the issuance of the statements of the cost of assets purchased
before the end of reporting period.

8. Nonadjusting events after reporting period include all of the following, except
a. A major business combination after the reporting period.
b. Expropriation of major assets by government after reporting period.
c. Destruction of a major production plant by fire on or before the end of reporting period.
d. Announcing a plan to discontinue an operation after reporting period.

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