Financial Accounting · Events after the reporting period

Non-Adjusting Events and Disclosure Under IAS 10

Updated 11 October 2026 · Fact-checked

A non-adjusting event is an event after the reporting period that shows conditions which arose after the year end. You do not change the recognised amounts. If the event is material, you disclose by note its nature and an estimate of its financial effect, or a statement that no estimate can be made.

Understand Non-Adjusting Events and Disclosure

IAS 10 deals with events that happen between the end of the reporting period and the date the financial statements are authorised for issue. These can be good or bad. Some give you more evidence about something that already existed at the year end. Others relate to something that only started after the year end.

A non-adjusting event is the second kind. It is an event after the reporting period that is indicative of conditions that arose after the reporting period. The year-end position was correct when it was drawn up, so the recognised amounts stay the same. Changing them would misstate what the business owned and owed at that date.

But users still need to know. If a large event happens just after the year end, it affects how they judge the future. So IAS 10 requires a note when the event is material. An event is material if leaving it out could influence the decisions users make.

Common examples are: a major business combination (acquisition) after the year end, announcing a plan to discontinue an operation, major purchases or disposals of assets, a fire or flood destroying a major plant after the year end, announcing or starting a major restructuring, major ordinary share transactions (such as a share issue), and large changes in asset prices or foreign exchange rates after the year end.

The key test is simple: did the condition exist at the year end? If yes, it is adjusting. If it arose after, it is non-adjusting. Do not judge by whether the news is good or bad.

Key formulas to remember

Period covered by IAS 10: Events after the reporting period = events between the reporting date and the date the financial statements are authorised for issue; Events after the authorisation date are outside IAS 10.
Non-adjusting event rule: Condition arose after the year end → do not adjust recognised amounts; Disclose by note if material.
Disclosure required: Note = nature of the event + estimate of its financial effect (or a statement that no estimate can be made); Only needed when the event is material.
Dividends declared after the year end: Declared after the reporting date → no liability at the year end; These are non-adjusting. Do not recognise a liability. IAS 10 says to disclose them by note if material.

How to solve Non-Adjusting Events and Disclosure questions

Use this method for any question on events after the reporting period.

1Find the year-end date and the date the financial statements were authorised for issue.
2Check the event date. If it falls outside that window, ignore it under IAS 10.
3Ask whether the condition existed at the year end. Yes means adjusting. No means non-adjusting.
4For a non-adjusting event, leave all recognised amounts unchanged. Do not touch profit, assets or liabilities.
5Judge whether the event is material. If it is not, no note is needed.
6If material, disclose the nature of the event and an estimate of its financial effect, or state that an estimate cannot be made.
7Check the exceptions: a dividend declared after the year end is never a liability at the year end, and going concern problems after the year end change the whole basis of preparation.

Quickest way: The year-end condition test

When to use it: Use it on multiple choice and multiple response questions where you must classify events fast.

Read the event and ask: was this situation already true on the last day of the year?
If it was, such as a customer already in trouble, treat it as adjusting.
If the event created something new, such as a fire, a takeover or a share issue, treat it as non-adjusting.
Pick the answer that says disclose only, with no change to figures.
Scan for traps: dividends declared after the year end and events after the authorisation date.

Common mistakes in Non-Adjusting Events and Disclosure

Adjusting the figures for a fire or flood that happened after the year end.
The loss is large and it feels wrong to ignore it.
Fix: The assets existed at the year end. Leave them as they are and disclose the event by note if it is material.
Treating bad news as adjusting and good news as non-adjusting.
Students judge by the tone of the event.
Fix: Judge only by whether the condition existed at the year end.
Recognising a dividend declared after the year end as a liability.
Students know dividends are a liability once declared.
Fix: There is no obligation at the year end. Do not recognise a liability. Disclose by note if material.
Forgetting the disclosure when the event is material.
Students stop once they decide not to adjust.
Fix: Finish with the note: nature of the event and an estimate of its financial effect.
Including events that happen after the financial statements are authorised for issue.
Students overlook the authorisation date.
Fix: Check the event date falls between the year end and authorisation. Anything later is outside IAS 10.

Worked examples

Example 1

A company has a 31 December year end. Its financial statements were authorised for issue on 15 March. On 20 January, a fire destroyed a warehouse that was in use at the year end. The loss is material. How should the company treat this event?

Show the solution

The event date of 20 January falls between the year end and the authorisation date of 15 March, so IAS 10 applies.
The fire happened after the year end. The warehouse existed in good condition at 31 December, so the condition arose after the reporting period.
The event is therefore non-adjusting. The warehouse stays in the statement of financial position at its year-end carrying amount.
The loss is material, so a note is needed. It should describe the fire and give an estimate of the financial effect, or state that no estimate can be made.

Answer: Non-adjusting event. Do not change the recognised amounts. Disclose the nature of the fire and its estimated financial effect by note.

Example 2

A company has a 30 June year end. On 10 August, before authorisation of the financial statements, the directors declared a final dividend of $200,000 on the year just ended. Which treatment is correct?
A. Recognise a liability of $200,000 at 30 June
B. Do not recognise a liability; disclose the dividend by note if material
C. Reduce inventory by $200,000
D. Ignore the dividend completely

Show the solution

The declaration on 10 August falls after the year end, within the IAS 10 window.
At 30 June the company had no obligation to pay the dividend, because it was not yet declared.
So no liability exists at the year end. The dividend is a non-adjusting event.
Option A is wrong because it creates a liability that did not exist. Option C has no link to the dividend. Option D ignores the disclosure requirement.
Option B is correct. The dividend is shown in the notes if material.

Answer: B. Do not recognise a liability at the year end. Disclose the dividend by note if it is material.

Exam tips

Always find the year-end and authorisation dates first. Events outside that window are not IAS 10 events.
Classify by whether the condition existed at the year end, not by whether the news is good or bad.
Remember the dividend rule: declared after the year end means no liability. It is a favourite trap.
In multiple response questions, look for the words fire, acquisition, share issue or restructuring announced after the year end. These point to non-adjusting events.
If an answer says adjust the figures for a non-adjusting event, it is wrong. The right answer is disclosure only.

Practice questions from Events after the reporting period

Non-Adjusting Events and Disclosure in other exams

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

Non-Adjusting Events and Disclosure: frequently asked questions

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

An adjusting event gives evidence of a condition that existed at the year end, so you change the recognised amounts. A non-adjusting event relates to a condition that arose after the year end, so you do not change them. You disclose it by note if material.

What must you disclose for a non-adjusting event?

You disclose the nature of the event and an estimate of its financial effect. If no estimate can be made, you state that. This is needed only if the event is material.

Are dividends declared after the year end adjusting events?

No. No obligation exists at the year end, so no liability is recognised. The dividend is non-adjusting and is disclosed by note if material.

Can a non-adjusting event ever change the financial statements?

Not the recognised amounts. However, if events after the year end show that the business is no longer a going concern, the financial statements must not be prepared on a going concern basis. That is a separate and more serious rule.