Financial Reporting · Provisions and events after the reporting period

Events After the Reporting Period (IAS 10): Adjusting and Non-Adjusting Events

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 that existed at the reporting date, so you change the figures. Non-adjusting events arise afterwards, so you only disclose them if material. Going concern problems override both.

Understand Events After the Reporting Period (IAS 10)

Financial statements are prepared at a reporting date, but they are signed off 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. Both favourable and unfavourable events count. Events after authorisation are outside IAS 10.

The key test is simple: did the event give you more evidence about a condition that already existed at the reporting date? If yes, it is an adjusting event and you change the recognised amounts. If the condition arose after the reporting date, it is a non-adjusting event. You do not change the figures. You disclose the nature of the event and an estimate of its financial effect (or a statement that it cannot be estimated), but only if it is material enough to influence users.

Typical adjusting events: a court case settled after the year end for a claim that existed at the year end; a customer going insolvent after the year end when the debt was already owed at the year end; inventory sold after the year end below cost, showing net realisable value was lower at the year end; discovery of fraud or errors that show the statements were wrong.

Typical non-adjusting events: a major business combination or disposal; a fire or flood destroying assets after the year end; a fall in market value of investments after the year end; announcing a plan to restructure after the reporting date (no constructive obligation at the year end); share issues. Dividends declared after the reporting date are also non-adjusting, because no obligation existed at the year end. Do not recognise them as a liability. Disclose them.

One exception overrides everything. A deterioration in operating results and financial position after the reporting date may indicate that the going concern assumption is no longer appropriate. If management decides after the reporting date to liquidate the entity or cease trading, or has no realistic alternative but to do so, IAS 10 requires that the financial statements are not prepared on a going concern basis. This is a fundamental change in the basis of preparation, not a classification as adjusting or non-adjusting, and it affects the whole set of statements, not just some figures.

Key rules 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 a condition existing at the reporting date → adjust recognised amounts; Examples: customer insolvency on an existing receivable, inventory NRV evidence, settlement of a court case for an existing obligation.
Non-adjusting event: Condition arose after the reporting date → no adjustment; disclose nature and estimated financial effect if material; If the effect cannot be estimated, say so.
Dividends: Dividends declared after the reporting date → not a liability at the reporting date; Disclose only. Do not accrue.
Going concern: Decision to liquidate or cease trading, or no realistic alternative, after the reporting date → do not use going concern basis; A serious deterioration in operating results and financial position after the reporting date may show going concern is no longer appropriate. The change affects the whole set of statements, not just some figures.

How to solve Events After the Reporting Period (IAS 10) questions

Use this method for any events after the reporting period question, whether it is a one-mark objective test or a written part of a longer question.

1Note the reporting date and, if given, the date the statements were authorised. Check each event falls between them.
2For each event, ask: did the underlying condition exist at the reporting date?
3If yes, classify it as adjusting. If the condition arose later, classify it as non-adjusting.
4For adjusting events, work out the correct amount and the journal. Adjust receivables, inventory, provisions or revenue as required, and remember the tax effect only if asked.
5For non-adjusting events, decide if it is material. If so, write a disclosure note with the nature of the event and the estimated financial effect.
6Check for dividends: declared after the year end means no liability, disclosure only.
7Check for going concern: if the entity is to liquidate or cease trading, say the statements cannot be on a going concern basis.
8State your conclusion in one clear sentence for each event.

Quickest way: Existed at the year end? Adjust. Arose later? Disclose.

When to use it: Use this in Section A and the Section B OT cases, where you have about 3.6 minutes per two-mark question (1.8 minutes per mark).

Underline the reporting date and the event date.
Ask whether the event confirms something already true at the year end.
Confirms it: adjust. Brand new circumstance: disclose only.
Dividends declared after the year end: always disclose only.
Liquidation decision after the year end: not going concern.
Pick the option that matches, and check the amount if a figure is needed.

Common mistakes in Events After the Reporting Period (IAS 10)

Treating a dividend declared after the year end as a liability.
Students think the dividend relates to profits earned in the year, so it must be accrued.
Fix: A liability needs a present obligation at the reporting date. A dividend declared afterwards creates none. Disclose it in the notes.
Classifying a fall in the market value of investments after the year end as adjusting.
The loss feels connected to the year because the investments were held at the year end.
Fix: The fall reflects market conditions arising after the year end. It is non-adjusting, so you disclose it if material.
Adjusting for a fire or flood that occurs after the year end.
The asset was on the statement of financial position, so students want to write it off.
Fix: The damage occurred after the year end, so the asset existed intact at that date. Disclose the event instead.
Forgetting that a customer insolvency after the year end usually adjusts the receivable.
Students focus on the date of insolvency and not on when the debt arose.
Fix: If the debt was owed at the year end and the insolvency shows it was already doubtful, write it off as an adjusting event.
Ignoring events after the authorisation date.
Students apply IAS 10 to every later event mentioned in the question.
Fix: Check the authorisation date. Events after it are not covered by IAS 10.
Disclosing a non-adjusting event with no estimate of its financial effect.
Students describe the event but stop there.
Fix: State the nature and an estimate of the effect, or state that an estimate cannot be made.

Worked examples

Example 1

Entity X has a year end of 31 December 20X5. The financial statements were authorised on 15 March 20X6. Inventory at the year end includes items at cost of $80,000. In February 20X6 these items were sold for $62,000 net of selling costs. Receivables include $25,000 owed by a customer who went into liquidation on 20 January 20X6. Neither amount had been adjusted. What adjustments are needed?

Show the solution

Both events fall between 31 December 20X5 and 15 March 20X6, so they are within IAS 10.
Inventory: the sale shows net realisable value at the year end was $62,000, a condition existing at the year end. This is an adjusting event.
Inventory is measured at the lower of cost and NRV. Write down by $80,000 − $62,000 = $18,000. Debit cost of sales $18,000, credit inventory $18,000.
Receivable: the debt arose before the year end and the liquidation gives evidence the customer was unable to pay at the year end. This is adjusting.
Write off $25,000. Debit irrecoverable debts expense (or the allowance) $25,000, credit receivables $25,000.
Total reduction in profit before tax = $18,000 + $25,000 = $43,000.

Answer: Both are adjusting events. Reduce inventory by $18,000 and receivables by $25,000, lowering profit before tax by $43,000.

Example 2

Entity Y has a year end of 30 June 20X6, with statements authorised on 10 September 20X6. On 15 August 20X6 the directors declared a dividend of $120,000. On 1 September 20X6 a fire destroyed a warehouse with a carrying amount of $300,000, insured for only $100,000. Explain the treatment of each event.

Show the solution

Both events fall between 30 June 20X6 and 10 September 20X6.
Dividend: no obligation existed at 30 June 20X6, because it was declared afterwards. It is non-adjusting. Do not recognise a liability. Disclose the $120,000 dividend in the notes.
Fire: the warehouse was in good condition at the year end and the fire is a new event. It is non-adjusting. Do not write off the asset in the 20X6 statements.
Assess materiality. The estimated financial effect is the $300,000 carrying amount less $100,000 insurance cover, which is about $200,000, assuming the insurer pays the full cover. This is likely material, so disclose the nature of the event and the estimated financial effect.
The loss and any insurance recovery are recognised in the 20X7 financial statements, subject to normal recognition rules.

Answer: Both are non-adjusting events. Disclose the $120,000 dividend and the fire, with an estimated financial effect of a loss of about $200,000 ($300,000 carrying amount less $100,000 insurance cover, assuming the insurer pays in full). Make no changes to recognised amounts.

Exam tips

Always write the test in your answer: did the condition exist at the reporting date? Markers reward this reasoning.
In Section C, give the classification, the reason, then the journal or disclosure. Do not just state the result.
Check the dates carefully. Questions often place an event after the authorisation date to catch you out.
Do the numbers. Many questions ask for revised profit, inventory or receivables after adjusting events, so recompute the totals.
Remember that objective test questions are all or nothing. Read every option before choosing, especially for dividends and going concern.

Practice questions from Provisions and events after the reporting period

Events After the Reporting Period (IAS 10) in other exams

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

Events After the Reporting Period (IAS 10): 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 you change the recognised amounts. A non-adjusting event relates to a condition that arose after the reporting date, so you only disclose it if material.

How are dividends declared after the reporting period treated under IAS 10?

They are non-adjusting. No obligation existed at the reporting date, so you do not recognise a liability. You disclose the dividend in the notes.

Is a customer going insolvent after the year end an adjusting event?

Usually yes, if the debt was owed at the year end. The insolvency confirms the receivable was already impaired. You write it off or increase the allowance.

How does IAS 10 affect going concern?

If management decides after the reporting date to liquidate the entity or stop trading, or has no realistic alternative, the statements must not be prepared on a going concern basis. This applies even if the entity traded profitably during the year.

Which date marks the end of the IAS 10 period?

The period ends when the financial statements are authorised for issue. Events after that date are not dealt with by IAS 10.