Strategic Business Reporting (International) · Presentation and disclosure in financial statements

IAS 10 Events After the Reporting Period Explained

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 amounts. **Non-adjusting events** arise after that date, so you only disclose them if material. Dividends declared after year end are not liabilities.

Understand IAS 10 Events After the Reporting Period

Financial statements are prepared as at a date, but they are signed off weeks or months later. News arrives in that gap. IAS 10 tells you what to do with it.

The period runs from the reporting date to the date the statements are authorised for issue. Events in this window can be favourable or unfavourable. The key question is simple: does the event give you more evidence about a condition that already existed at the reporting date?

If yes, it is an adjusting event. You change the recognised amounts. A customer going bankrupt after year end, where the debt was already doubtful at year end, is a classic case. A court case settled after year end, for a claim that existed at the reporting date, is another.

If no, it is a non-adjusting event. The condition arose after the reporting date. You do not change the amounts. You disclose the nature of the event and an estimate of its financial effect, if it is material enough to influence users. Examples are a fire after year end, a business combination or a major share issue after the date, and a fall in market value of investments after the date.

Two special points matter in SBR. First, dividends declared after the reporting period on equity shares are not recognised as a liability at the reporting date, because there is no obligation then. Second, deterioration in operating results and financial position after the reporting period may indicate that the going concern assumption is no longer appropriate. That requires a fundamental change in the basis of accounting, rather than an adjustment to recognised amounts.

Key rules to remember

Period covered: Reporting date → date financial statements are authorised for issue; Includes events up to authorisation, even if after a profit announcement.
Adjusting event rule: Evidence of condition existing at reporting date → adjust recognised amounts; Also adjust related disclosures.
Non-adjusting event rule: Condition arose after reporting date → no adjustment; disclose nature and estimated financial effect if material; If an estimate cannot be made, say so.
Dividends: Equity dividends declared after reporting date → no liability at reporting date; disclose in the notes; IAS 10 prohibits recognising a liability for dividends declared after the reporting period, and the dividend is disclosed in the notes under IAS 1. Declared before the reporting date means a liability is recognised.
Going concern: Management intends to liquidate or cease trading, or has no realistic alternative → do not use going concern basis; Applies even if the deterioration occurs after the reporting date.

How to solve IAS 10 Events After the Reporting Period questions

Use the same short test for every event in a scenario question.

1Note the reporting date and the authorisation date. Check the event falls between them.
2Ask what happened and when the underlying condition arose.
3Decide: does the event confirm a condition existing at the reporting date? If yes, adjusting. If no, non-adjusting.
4For an adjusting event, state the accounting change and calculate the effect on profit, assets and liabilities.
5For a non-adjusting event, state that no adjustment is made, then say what to disclose and whether it is material.
6Check special cases: dividends, going concern, and whether the event is really a post-date event or just a normal reporting date adjustment.
7Close with the effect on the financial statements and, if relevant, comment on ethics or earnings management.

Quickest way: Condition test

When to use it: Use when a scenario lists several post-year-end events and time is short.

Write A or N next to each event.
A means the condition existed at the reporting date, for example a settlement, a bankruptcy of a debtor, or inventory sold below cost.
N means a new condition, for example a fire, a takeover, or a currency or price movement.
Quantify A items and note the disclosure points for N items.
Check dividends and going concern last.

Common mistakes in IAS 10 Events After the Reporting Period

Recognising a dividend declared after the year end as a liability.
Students link dividends with the year they relate to.
Fix: A liability exists only if the entity has an obligation at the reporting date. Disclose the dividend in the notes instead.
Treating every unfavourable event as adjusting.
Bad news feels like it should affect the numbers.
Fix: Focus on when the condition arose, not whether the news is good or bad. A fire after year end is non-adjusting.
Adjusting for a fall in market value of investments after the year end.
It looks like impairment evidence.
Fix: Price movements after the date reflect new circumstances. Treat them as non-adjusting and disclose if material.
Ignoring disclosure for material non-adjusting events.
Students stop once they decide there is no adjustment.
Fix: Always state the nature of the event and an estimate of its financial effect, or say that no estimate can be made.
Missing the going concern consequence.
Students treat IAS 10 as only about individual balances.
Fix: If post-period events show the entity will cease trading, the whole basis of preparation changes. Say so clearly.
Using the wrong cut-off date.
Students stop at the date the accounts were completed or profits announced.
Fix: The window ends at the date the statements are authorised for issue. Read the dates in the scenario carefully.

Worked examples

Example 1

Aarav Co has a reporting date of 31 March 20X6. The financial statements were authorised for issue on 20 June 20X6. Receivables include ₹12,00,000 owed by Kiran Ltd. Kiran Ltd was already in financial difficulty at 31 March 20X6, with payments several months overdue. Aarav Co had no allowance against this debt at 31 March. On 10 May 20X6 Kiran Ltd went into liquidation, and Aarav Co expects to recover nothing. On 5 May 20X6 a warehouse was destroyed by fire, with an uninsured loss of ₹8,00,000. Explain the treatment of each event.

Show the solution

Both events fall between 31 March and 20 June 20X6, so IAS 10 applies.
Kiran Ltd's liquidation: Kiran Ltd was already in financial difficulty at the reporting date, and the liquidation confirms that the debt was impaired at that date. This is an adjusting event. If the difficulty had arisen only after 31 March, it would be non-adjusting.
Adjust: write off the ₹12,00,000 receivable, so profit and receivables both fall by ₹12,00,000 (subject to any tax effect).
Fire: the warehouse was intact at 31 March. The condition arose after the reporting date, so it is non-adjusting.
Do not change the amounts. Disclose the nature of the event and the estimated loss of ₹8,00,000 if material.

Answer: Kiran Ltd: adjusting, because its difficulty existed at 31 March. Write off ₹12,00,000. Fire: non-adjusting. No adjustment; disclose the nature and the ₹8,00,000 estimated effect if material.

Example 2

Meera Co has a year end of 30 September 20X5. On 15 November 20X5 its board declared a final equity dividend of ₹5,00,000. Before authorisation on 10 December 20X5, the board also learned that a legal claim against it, provided at ₹2,00,000 at year end, was settled on 1 December for ₹3,50,000. The claim related to a product sold in August 20X5. Explain the accounting.

Show the solution

Dividend: it was declared after the reporting date, so there was no obligation at 30 September. IAS 10 prohibits recognising a liability.
Disclose the dividend in the notes, as IAS 1 requires. It is not an adjusting event.
Legal claim: the claim arose from a sale before the year end, so the settlement gives more evidence of a condition existing at the reporting date. This is adjusting.
Increase the provision from ₹2,00,000 to ₹3,50,000. The extra charge is ₹3,50,000 − ₹2,00,000 = ₹1,50,000, recognised in profit or loss for the year.
Update the related provision disclosures.

Answer: No dividend liability; disclose the ₹5,00,000 dividend. Adjust the claim by an additional ₹1,50,000 charge, giving a ₹3,50,000 liability.

Exam tips

Always write the reporting date and authorisation date first. Marks often depend on whether an event falls inside the window.
Justify each classification in one sentence about when the condition arose. A label alone earns little.
For non-adjusting events, give the disclosure content: nature and estimated financial effect.
Link IAS 10 to IAS 37 for settlements, IAS 36 or IFRS 9 for impairment, and IAS 1 for going concern.
Use professional skills marks: comment on whether management might delay or accelerate recognition to flatter results.

Practice questions from Presentation and disclosure in financial statements

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 you change the recognised amounts. A non-adjusting event relates to a condition that arose after the reporting date, so you do not adjust and only disclose if material.

Can I recognise a dividend declared after year end?

No. For equity dividends declared after the reporting period, there is no obligation at the reporting date. You do not recognise a liability, but you disclose the dividend in the notes.

Which date ends the IAS 10 period?

The period ends when the financial statements are authorised for issue. This can be later than the date the auditor signs or profits are announced, so use the date given in the question.

What if the entity stops being a going concern after the year end?

IAS 10 requires you not to prepare the statements on a going concern basis if management intends to liquidate or cease trading, or has no realistic alternative. This applies even if the deterioration happens after the reporting date.