Financial Accounting · Disclosure notes

IAS 10 Events After the Reporting Period: Adjusting vs Non-Adjusting

Updated 11 October 2026 · Fact-checked

IAS 10 covers events between the reporting date and the date the financial statements are authorised for issue. Adjusting events give evidence of conditions at the reporting date, so you change the figures. Non-adjusting events arise after that date, so you only disclose them if they are material.

Understand IAS 10 Events After the Reporting Period

A set of financial statements shows the position at the reporting date, for example 31 December. But the statements are not signed off that day. Directors authorise them weeks or months later. Things happen in that gap. IAS 10 tells you what to do about them.

The period it covers runs from the reporting date to the date the financial statements are authorised for issue. Events in this window can be good or bad. Both count.

The key test is simple. Ask: does the event give more evidence about a condition that already existed at the reporting date? If yes, it is an adjusting event. You change the amounts in the financial statements. If the event arises from a condition that began after the reporting date, it is a non-adjusting event. You do not change the amounts.

Non-adjusting events are disclosed in the notes only if they are material, meaning that not disclosing them could influence users' decisions. The note gives the nature of the event and an estimate of its financial effect, or a statement that no estimate can be made.

There is one major exception. If management decides after the reporting date to liquidate the entity or stop trading, or has no realistic alternative, the financial statements are no longer prepared on a going concern basis. This is treated as so pervasive that it affects the whole basis of preparation.

Key formulas to remember

Period covered: Reporting date → date financial statements are authorised for issue; Events outside this window are not IAS 10 events.
Adjusting event: Evidence of conditions existing at the reporting date → adjust the amounts; Examples: a customer's bankruptcy confirming a receivable was impaired; a court case settled for a different amount than the provision; discovery of fraud or errors; finalising the price of assets bought or sold before year end.
Non-adjusting event: Conditions arising after the reporting date → do not adjust; disclose if material; Examples: a fire destroying inventory after year end, a major business combination, a fall in market value of investments, announcing a restructuring after the reporting date (where no obligation existed at year end). A restructuring provision is recognised under IAS 37 only if, by the reporting date, there is a detailed formal plan and a valid expectation in those affected (through announcement or by starting to implement the plan) that the entity will carry it out.
Disclosure for non-adjusting events: Nature of the event + estimate of financial effect (or statement that it cannot be estimated); Only required where the event is material.
Dividends declared after the reporting date: Declared after year end → no liability at year end → disclose the dividend in the notes; The obligation does not exist at the reporting date, so no liability is recognised. The notes give the amount of the dividend proposed or declared after the reporting period but before authorisation.
Going concern exception: Decision to liquidate or cease trading after the reporting date → do not use the going concern basis; This applies even if the decision was made after the reporting date.

How to solve IAS 10 Events After the Reporting Period questions

Use this method for any IAS 10 question, whether it asks you to classify an event, adjust a figure or choose the correct note.

1Check the timing. Is the event between the reporting date and the authorisation date? If it falls outside, IAS 10 does not apply.
2Ask whether the event gives evidence about a condition that existed at the reporting date.
3If yes, classify it as adjusting. If the condition arose after the reporting date, classify it as non-adjusting.
4For an adjusting event, work out the correct figure and the difference from the amount already recorded. Adjust the relevant asset, liability, income or expense.
5For a non-adjusting event, leave the figures unchanged. Check whether it is material. If it is, disclose its nature and estimated financial effect.
6Check for special cases: dividends declared after year end (disclose only) and a decision to cease trading (going concern basis no longer appropriate).
7State the effect on profit and on the statement of financial position if the question asks for it.

Quickest way: The 'Was it already true at year end?' test

When to use it: Use it for multiple choice and multiple response questions that list several events and ask you to pick the adjusting ones.

Read each event and ask: was the underlying problem already there at the reporting date?
Court case, customer insolvency, inventory sold below cost, or fraud found: the problem was already there. Adjusting.
Fire, flood, share price fall, new acquisition, new loan, or dividend declared: it happened after. Non-adjusting.
Check the date. An event after the authorisation date is not covered.
If the question asks for a number, adjust only for adjusting events and ignore the rest.

Common mistakes in IAS 10 Events After the Reporting Period

Treating every bad event after year end as adjusting.
Students focus on how serious the event is rather than when the condition arose.
Fix: Ignore size and ask whether the condition existed at the reporting date. A fire after year end is non-adjusting, however large.
Recording a dividend declared after the year end as a liability.
Students think a dividend is always owed once it is mentioned.
Fix: A liability exists only if the dividend was declared by the reporting date. If declared afterwards, disclose it in the notes and do not accrue it.
Adjusting for a non-adjusting event and changing profit.
Students want the accounts to show the latest information.
Fix: Non-adjusting events never change recognised amounts. They only affect the notes.
Forgetting to disclose a material non-adjusting event.
Students stop once they decide not to adjust.
Fix: After classifying as non-adjusting, always ask whether it is material and, if so, disclose its nature and estimated financial effect.
Adjusting by the full settlement amount instead of the difference.
Students forget a provision or receivable was already recorded.
Fix: Compare the new evidence with the amount already in the books and post only the difference.
Missing the going concern exception.
Students learn the adjusting versus non-adjusting split and assume every event fits it.
Fix: If management decides to liquidate or cease trading after year end, the going concern basis is no longer appropriate, even though the decision came after the reporting date.

Worked examples

Example 1

A company has a year end of 31 December 20X5. Financial statements are authorised on 15 March 20X6. At year end, receivables include ₹4,00,000 owed by Customer A, with no allowance made. On 20 January 20X6 Customer A was declared insolvent and the company expects to recover nothing. On 5 February 20X6 a warehouse fire destroyed inventory worth ₹2,50,000 which was not insured. Classify each event and state the accounting treatment.

Show the solution

Both events fall between 31 December 20X5 and 15 March 20X6, so IAS 10 applies to both.
Customer A's insolvency: the customer's financial difficulty existed at the reporting date, and the insolvency confirms the receivable was impaired. This is an adjusting event.
Adjustment: write off ₹4,00,000. Debit irrecoverable debts expense ₹4,00,000, credit receivables ₹4,00,000. Profit falls by ₹4,00,000.
Warehouse fire: the fire happened after the reporting date, so the inventory existed undamaged at year end. This is a non-adjusting event.
No adjustment is made to inventory. Whether the ₹2,50,000 loss needs disclosure depends on materiality. Materiality is judged against the financial statements as a whole, such as total assets or profit, not against a single receivable. The question gives no such figures, so you cannot conclude that it is material.
If the loss is material to the financial statements as a whole, disclose the nature of the event and its estimated financial effect of ₹2,50,000 in the notes. If it is not material, no disclosure is needed.

Answer: The insolvency is adjusting: write off ₹4,00,000 as an irrecoverable debt. The fire is non-adjusting: no change to the figures. Disclose it in the notes only if the ₹2,50,000 loss is material to the financial statements as a whole. The data given does not let you decide that. If it is material, disclose the nature of the event and the estimated effect of ₹2,50,000.

Example 2

Which ONE of the following is an adjusting event for a company with a 31 March year end, with financial statements authorised on 30 June? A) The directors declared a final dividend on 15 May. B) A court case, in respect of an incident in February, was settled on 10 May for ₹8,00,000, and a provision of ₹5,00,000 had been recorded at 31 March. C) The company bought a competitor on 20 April. D) The market value of the company's investments fell sharply in May.

Show the solution

Option A: the dividend was declared after the reporting date, so no liability existed at 31 March. Non-adjusting, disclose.
Option B: the incident occurred before the year end, so the obligation existed at the reporting date. The settlement gives evidence of its amount. This is adjusting.
Option C: an acquisition after year end is a new transaction. Non-adjusting, disclose if material.
Option D: a fall in market value after year end reflects conditions arising after the reporting date. Non-adjusting.
For option B, the adjustment would be the difference: ₹8,00,000 less ₹5,00,000 = ₹3,00,000 extra provision and expense.

Answer: B is the adjusting event. Increase the provision by ₹3,00,000, which reduces profit by ₹3,00,000.

Exam tips

Highlight the reporting date and the authorisation date in every question. The timing decides whether IAS 10 applies.
In multiple response questions, select only events that confirm a year-end condition. Settled court cases, customer insolvencies and inventory sold below cost are the usual adjusting items.
Learn a short list of non-adjusting examples: fire or flood, acquisition, share price fall, new share issue, dividend declared, restructuring announced after year end (with no detailed formal plan and valid expectation in those affected by the reporting date).
For number entry questions, adjust only for the difference between the new evidence and the amount already recorded.
Remember dividends declared after year end are never a liability at year end. This appears often in multiple choice.

Practice questions from Disclosure notes

IAS 10 Events After the Reporting Period in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

IAS 10 Events After the Reporting Period: frequently asked questions

What is the difference between adjusting and non-adjusting events?

An adjusting event provides evidence of a condition that existed at the reporting date, so the financial statements are changed. A non-adjusting event relates to conditions that arose after the reporting date, so figures stay unchanged and the event is disclosed if material.

How do you treat non-adjusting events in financial statements?

You do not change recognised amounts. If the event is material, you disclose in the notes what happened and an estimate of the financial effect. If no estimate can be made, you say so.

Are dividends declared after the reporting period adjusting events?

No. The dividend is not an obligation at the reporting date, so you do not recognise a liability. You disclose the dividend in the notes.

What period does IAS 10 cover?

It covers the period from the reporting date to the date the financial statements are authorised for issue. Events before or after that window are outside IAS 10.

What happens if a company decides to cease trading after the year end?

The financial statements should not be prepared on a going concern basis. This applies even though the decision was made after the reporting date, because it affects the whole basis of preparation.