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IAS 10 Events after the Reporting Period: Summary, Practice Questions & Decision Tree
Last updated 13 August 2026 · Written by the AccountingTutorAI team · Reviewed by a qualified CPA (Canada)
Quick summary
Financial statements are dated at the reporting date but signed weeks or months later — IAS 10 governs what happens with everything that occurs in between. Events in that window split into two kinds. Adjusting events provide evidence of conditions that already existed at the reporting date: the numbers are changed. Non-adjusting events reflect conditions that arose afterwards: the numbers stay, but material events are disclosed. Two special rules cut across the split: dividends declared after the reporting date are never a liability, and if the going concern basis fails after the period, the statements are redrawn regardless of when the cause arose.
The window that matters
Events after the reporting period are those occurring between the end of the reporting period and the date the financial statements are authorised for issue (IAS 10.3) — board approval, in most entities. The authorisation date bounds the entity's responsibility: events after it belong to next period's statements entirely, however dramatic. The date of authorisation and who gave it are disclosed (IAS 10.17), precisely so readers know where the entity stopped looking. A December year-end authorised in late March gives a three-month window in which every significant event must be sorted into one of two boxes.
Adjusting events: evidence of existing conditions
An adjusting event provides evidence of conditions that existed at the end of the reporting period — the event is new, the condition is not. The amounts in the financial statements are adjusted (IAS 10.8–9). The classics:
- A customer's bankruptcy shortly after the period end, confirming the receivable was already doubtful at the reporting date
- Sale of inventory below cost after year end, evidencing its net realisable value at the reporting date
- Settlement of a court case that confirms a present obligation existed at the reporting date
- Discovery of fraud or errors showing the statements were wrong as drawn up
- Determination after year end of the price of assets bought, or proceeds of assets sold, before year end
Non-adjusting events: new conditions, disclosure only
A non-adjusting event reflects conditions that arose after the reporting period. The amounts are not changed — but if the event is material, the entity discloses its nature and an estimate of its financial effect, or a statement that no estimate can be made (IAS 10.10, 21). Typical examples:
- A fire, flood or other disaster destroying assets after the year end
- A major business combination announced or completed after the period
- Announcing a plan to discontinue an operation
- Major share issues or buy-backs after the reporting date
- Abnormal falls in the market value of investments between the reporting date and authorisation
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Try the AI TutorDividends and the going concern override
Dividends declared after the reporting period are not a liability at the reporting date — no obligation existed then, so they are disclosed rather than accrued (IAS 10.12–13). This catches out students every year: a December year-end dividend proposed in February appears nowhere in December's liabilities.
Going concern is the one place IAS 10 breaks its own symmetry. If, after the reporting period, management determines it intends to liquidate or cease trading — or has no realistic alternative — the financial statements are not prepared on a going concern basis at all (IAS 10.14–15). Even where the deterioration arose entirely after the year end, a basis-of-preparation change is required, not mere disclosure: accounts drawn up as if the business will continue would be fundamentally misleading.
Worked example: bankruptcy vs fire — one adjusts, one discloses
An entity with a 31 December year end authorises its financial statements on 20 March. Two events occur in the window. (1) On 10 February, customer K enters bankruptcy owing CU 45,000; correspondence shows K's financial position had been deteriorating throughout the autumn, and no recovery is expected. (2) On 28 February, a fire destroys a warehouse with a carrying amount of CU 300,000; insurance covers CU 220,000 of the loss.
| Event | Condition at 31 December? | Classification | Action |
|---|---|---|---|
| Customer K bankrupt (10 Feb) | Yes — K was already in financial difficulty | Adjusting | Write the receivable down in the December statements |
| Warehouse fire (28 Feb) | No — the warehouse stood at year end | Non-adjusting | Disclose nature and CU 80,000 net exposure |
| Receivable written down at 31 December | 45,000 | ||
The bankruptcy evidences a condition existing at the reporting date (IAS 10.9(b)(i)); the fire is a new condition arising afterwards (IAS 10.22(a)).
| Account | Dr (CU) | Cr (CU) |
|---|---|---|
| Dr Impairment loss on receivables (P&L) | 45,000 | |
| Cr Loss allowance — trade receivables | 45,000 |
The December financial statements therefore charge the CU 45,000 loss even though the bankruptcy filing happened in February — the condition (K's inability to pay) existed at the reporting date, and the filing merely proved it. The fire changes nothing in the December numbers: the warehouse was intact at year end. Instead the notes disclose the event and its estimated net effect (300,000 loss less 220,000 expected insurance recovery = CU 80,000). If the fire had been severe enough to threaten the entity's survival, disclosure would no longer be enough — the going concern override would demand a different basis of preparation altogether.
Test yourself: 5 IAS 10 practice questions
1. Inventory carried at cost of CU 50,000 at 31 December is sold for CU 38,000 in January, before the statements are authorised. What does IAS 10 require?
- A. No change — the sale is next year's transaction
- B. Write the inventory down by CU 12,000 in the December statements
- C. Disclose the sale as a non-adjusting event
- D. Restate only if the buyer is a related party
Show answer
Correct answer: B
The January sale evidences the inventory's net realisable value at the reporting date — a condition that existed at year end (IAS 10.9(b)(ii)). It is an adjusting event: the December statements carry the inventory at CU 38,000, a CU 12,000 write-down consistent with IAS 2's lower-of-cost-and-NRV rule.
2. A dividend of CU 100,000 is declared in February for a 31 December year end, before authorisation of the statements. How is it treated in the December statements?
- A. Recognised as a liability of CU 100,000
- B. Recognised directly in retained earnings
- C. Disclosed in the notes; no liability recognised
- D. Ignored entirely
Show answer
Correct answer: C
No obligation existed at 31 December — the declaration came later — so the dividend is not a liability (IAS 10.12–13). It is disclosed in the notes, and will be recognised in equity when declared, in the next period's statements.
3. Which of these is an ADJUSTING event after the reporting period?
- A. A flood destroying a factory in the following month
- B. Settlement of litigation confirming the entity's obligation at the reporting date
- C. Announcing a major restructuring after year end
- D. A fall in the market value of listed investments after year end
Show answer
Correct answer: B
A settlement that confirms a present obligation existed at the reporting date adjusts the statements — the provision replaces whatever estimate was previously made (IAS 10.9(a)). Disasters, restructuring announcements and post-period market falls all reflect new conditions: non-adjusting, disclose if material (IAS 10.22).
4. After the year end but before authorisation, management concludes the entity will have to cease trading. The deterioration was caused entirely by a post-year-end event. The financial statements:
- A. Remain on a going concern basis, with the event disclosed
- B. Are not prepared on a going concern basis
- C. Are adjusted only for the specific assets affected
- D. Are delayed until the situation resolves
Show answer
Correct answer: B
IAS 10.14–15 overrides the adjusting/non-adjusting split: if the going concern assumption is no longer appropriate — even due to events arising wholly after the period — the statements must be prepared on a different basis. Disclosure alone cannot fix accounts built on a broken premise.
5. The financial statements were authorised for issue on 25 March. A major acquisition is agreed on 2 April. What does IAS 10 require for the current statements?
- A. Disclosure as a non-adjusting event
- B. Adjustment of the statements
- C. Nothing — the event falls outside the IAS 10 window
- D. Re-authorisation of the statements
Show answer
Correct answer: C
IAS 10 covers only events between the reporting date and the authorisation date (IAS 10.3). An event after authorisation belongs to the next reporting period, however significant — one reason the authorisation date itself must be disclosed (IAS 10.17).
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Exam tips & tricky areas
Events straddling the window, refinancing after year end, and the IAS 37 boundary on new obligations.
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Start freeFrequently asked questions
What is the difference between adjusting and non-adjusting events?
Adjusting events provide evidence of conditions that existed at the end of the reporting period — the amounts are changed (customer bankruptcies confirming bad debts, post-year-end sales evidencing NRV, settlements confirming obligations). Non-adjusting events reflect conditions that arose afterwards — the amounts stay, and material events are disclosed with an estimate of their effect (IAS 10.8–10, 21).
How are dividends declared after the reporting period treated?
They are not recognised as a liability at the reporting date, because no obligation existed then (IAS 10.12–13). They are disclosed in the notes. The liability (and the equity movement) belongs to the period in which the dividend is actually declared.
What is the going concern exception in IAS 10?
If management determines after the reporting period that it intends to liquidate the entity or cease trading, or has no realistic alternative, the financial statements cannot be prepared on a going concern basis — even if the deterioration arose entirely after the year end (IAS 10.14–15). It is the one case where a post-period condition changes the basis of the statements rather than just the notes.
What is the date of authorisation for issue?
The date the financial statements are approved for release outside the entity — typically board approval — and the cut-off for IAS 10's window (IAS 10.4–6). Both the date and who gave the authorisation must be disclosed (IAS 10.17), because everything after it is outside the statements' scope.
Are post-year-end falls in investment values adjusting events?
Normally not. A decline in market value after the reporting period reflects conditions arising afterwards, not the value at the reporting date, so it is non-adjusting (IAS 10.11) — disclosed if material. The exception is where evidence shows the impairment condition already existed at the year end.
How does IAS 10 interact with IAS 37?
IAS 10 decides whether after-date evidence changes the reporting-date picture; IAS 37 decides how the obligation is measured once it does. A court settlement in the window converts an IAS 37 estimate into a known amount (adjusting). But an obligation created entirely after year end — a new lawsuit over a January incident — is next period's provision, at most a non-adjusting disclosure now.
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