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Financial Reporting · Ind AS 10 Events after the Reporting Period

Adjusting Events after the Reporting Period (Ind AS 10) – CA Final Financial Reporting

Updated 5 October 2026 · Fact-checked

Adjusting events are events after the reporting period that give evidence of conditions that already existed at the reporting date. You adjust the amounts recognised in the financial statements. To solve: fix the dates, ask whether the condition existed at the reporting date, then adjust the related asset, liability, income or expense.

Understand Adjusting Events after the Reporting Period

Ind AS 10 deals with events after the reporting period. These are favourable or unfavourable events that happen between the reporting date (for example 31 March) and the date the financial statements are approved for issue by the board. Events after that approval date are outside the standard.

The key question is simple: did the condition exist at the reporting date? If the event only confirms something that was already true on 31 March, it is an adjusting event. You change the recognised amounts. If the condition arose after 31 March, it is a non-adjusting event, which is a separate topic.

Think of it as late evidence. A customer goes bankrupt in April. The customer was already in financial trouble on 31 March, so the April event confirms that the receivable was impaired at year end. You write the receivable down in the year just ended.

Typical adjusting events in exams are: a court case settled after year end for an amount different from the provision; bankruptcy of a customer with an outstanding balance; sale of inventory after year end that shows its net realisable value at year end; discovery of fraud or errors showing the financial statements were incorrect; and determination after year end of the cost or sale proceeds of assets bought or sold before year end. A profit-sharing or bonus payment also fits when the entity has a present legal or constructive obligation at the reporting date to make the payment as a result of events before that date.

Always read the dates in the question. The event date, the reporting date and the approval date decide the treatment.

Key rules to remember

Definition of events after the reporting period
Events between the end of the reporting period and the date the financial statements are approved for issue
Applies to favourable and unfavourable events. Both adjusting and non-adjusting events fall in this window.
Test for adjusting event
Event provides evidence of conditions that existed at the end of the reporting period → ADJUST
If the condition arose after the reporting date, it is non-adjusting. Do not adjust, but disclose if material.
Adjustment amount (litigation)
Adjustment = Settlement amount − Provision already recognised
If there was no provision and the settlement confirms a present obligation, recognise the full amount as a provision. If the result is positive, increase the provision; if negative, reverse the excess.
Adjustment amount (customer insolvency)
Additional loss = Carrying amount of receivable − Amount expected to be recovered − Allowance already made
Recovery is estimated from the insolvency position. Adjust the loss allowance.
Inventory write-down
Write-down = Cost − Net realisable value (only if NRV < cost)
Post year-end selling prices are evidence of NRV at year end. Use NRV net of selling costs.

How to solve Adjusting Events after the Reporting Period questions

Use this method for any question on adjusting events. It keeps your answer in provision-facts-conclusion form.

  1. 1Write the three dates: reporting date, event date and date of approval of the financial statements. Check the event falls between the first and last.
  2. 2Identify the event and the item it affects: receivable, inventory, provision, asset or liability.
  3. 3Ask whether the event gives evidence of a condition that existed at the reporting date. State the reason in one line.
  4. 4If yes, classify it as adjusting. If the condition arose after the reporting date, classify it as non-adjusting and stop adjusting.
  5. 5Compute the adjustment: new amount less amount already recognised. Show the working.
  6. 6Pass the journal entry or state the revised figure in the balance sheet and profit or loss. Include the tax effect only if the question gives a rate.
  7. 7Add the disclosure if asked: date of approval for issue, and the nature of the event if it is material and non-adjusting.
  8. 8Conclude in one sentence with the revised profit or amount.

Quickest way: Exam-time shortcut: the 31 March test

When to use it: Use it for short MCQs and for quickly classifying events in a multi-part written question.

  1. Mentally go back to 31 March. Was the problem already there?
  2. If yes, the post year-end event only gives the number. Adjust.
  3. If the event itself creates the problem, such as a fire, a new acquisition or a currency fall after year end, do not adjust.
  4. Compute the difference between the new evidence and the book figure. Post that difference only.

Common mistakes in Adjusting Events after the Reporting Period

  • Adjusting for events that happened after the approval date.

    Students focus on the reporting date and ignore the approval date.

    Fix: Check that the event occurs before the date of approval of the financial statements. Later events are not covered by Ind AS 10 adjustment.

  • Treating customer insolvency as non-adjusting because it occurred in April.

    The event date is after year end, so it looks like a new event.

    Fix: A customer's insolvency after year end normally confirms that the receivable was already impaired at year end. Adjust, unless the question shows the loss was caused by a later event.

  • Booking the full settlement amount again instead of the difference.

    Students forget the provision already made.

    Fix: Adjust only the difference between settlement and the existing provision.

  • Using the gross selling price as NRV.

    Costs to sell are overlooked.

    Fix: NRV = selling price − costs necessary to make the sale. Compare it with cost and write down the shortfall.

  • Treating a loss from a post year-end fire or market fall as adjusting.

    Students see an unfavourable event and assume adjustment.

    Fix: Ask whether the condition existed on 31 March. A fire after year end did not. It is non-adjusting; disclose it if material.

  • Ignoring fraud or errors discovered after year end.

    Students think only court cases and insolvency are adjusting.

    Fix: Fraud or errors that show the financial statements were incorrect are adjusting events. Correct the amounts affected.

Worked examples

Example 1

Case: A company's reporting date is 31 March 2027. Financial statements were approved by the board on 20 May 2027. A customer, Bharat Traders, owed ₹40,00,000 at 31 March 2027, and the company had made no allowance. On 25 April 2027, Bharat Traders was declared insolvent. The company expects to recover only ₹10,00,000. Show the treatment.

Show the solution
  1. Dates: reporting date 31 March 2027; event 25 April 2027; approval 20 May 2027. The event falls within the window.
  2. The customer's insolvency normally results from financial difficulty that existed at 31 March. It confirms the receivable was impaired at the reporting date.
  3. Conclusion on classification: adjusting event under Ind AS 10.
  4. Loss = ₹40,00,000 − ₹10,00,000 − ₹0 = ₹30,00,000.
  5. Journal: Impairment loss (Profit and Loss) Dr ₹30,00,000 to Loss allowance on trade receivables Cr ₹30,00,000.
  6. Receivable is presented net at ₹10,00,000 and profit for the year falls by ₹30,00,000 before tax.

Answer: Adjusting event. Recognise an additional impairment loss of ₹30,00,000 in the year ended 31 March 2027. The net receivable is ₹10,00,000.

Example 2

Case: Reporting date is 31 March 2027; accounts approved on 30 June 2027. A lawsuit against the company was pending at year end, and the company had recognised a provision of ₹12,00,000 on the basis of legal advice. On 10 May 2027 the court ordered the company to pay ₹18,00,000. Separately, inventory costing ₹9,00,000 at year end was sold on 15 April 2027 for ₹8,00,000, with selling costs of ₹50,000. The inventory was carried at cost. Show the adjustments.

Show the solution
  1. Lawsuit: the case was pending at year end, so the obligation existed. The court order confirms the amount. This is an adjusting event.
  2. Additional provision = ₹18,00,000 − ₹12,00,000 = ₹6,00,000.
  3. Journal: Litigation expense Dr ₹6,00,000 to Provision for litigation Cr ₹6,00,000.
  4. Inventory: the April sale gives evidence of NRV at the reporting date (Ind AS 10 and Ind AS 2), so it is adjusting.
  5. NRV = ₹8,00,000 − ₹50,000 = ₹7,50,000.
  6. Write-down = ₹9,00,000 − ₹7,50,000 = ₹1,50,000.
  7. Journal: Cost of goods sold or inventory write-down Dr ₹1,50,000 to Inventories Cr ₹1,50,000.
  8. Total reduction in profit before tax = ₹6,00,000 + ₹1,50,000 = ₹7,50,000.

Answer: Both are adjusting events. Increase the litigation provision by ₹6,00,000 and write down inventory by ₹1,50,000 to NRV of ₹7,50,000. Profit before tax falls by ₹7,50,000.

Exam tips

  • Write the three dates first. Many marks go for correct classification, and the dates justify it.
  • Give a one-line reason for each classification: 'condition existed at the reporting date' or 'condition arose after'.
  • Show the working for the adjustment amount as new figure less existing figure. Partial marks depend on it.
  • In MCQs, look for words like 'confirms', 'settled', 'insolvent' and 'sold' for year-end stock. They usually signal adjusting events.
  • Mention the date of approval for issue in disclosure answers. It is a required disclosure.

Practice questions from Ind AS 10 Events after the Reporting Period

Adjusting 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.

Adjusting Events after the Reporting Period: frequently asked questions

What are examples of adjusting events under Ind AS 10?

Common examples are a court case settled after year end for an amount different from the provision, insolvency of a customer whose balance was outstanding at year end, and post year-end sale of inventory showing its NRV. Others are discovery of fraud or errors and determination of the cost or proceeds of assets bought or sold before year end.

How do I treat a court settlement after the reporting period?

If the case related to a situation existing at the reporting date, the settlement is an adjusting event. Compare the settlement with the provision already made and adjust the difference. If no provision exists, recognise the amount as a provision, as long as the obligation existed at year end.

Is customer insolvency after the balance sheet date always adjusting?

Usually yes, because it confirms that the receivable was impaired at year end. If the facts show the customer's loss arose wholly from an event after year end, such as a fire or disaster, it is not adjusting. Read the facts in the question.

Until when are events after the reporting period considered?

Until the date the financial statements are approved for issue. For a company this is the date of approval by the board of directors. Events after that date are not covered by the adjustment requirement.