Financial Reporting · Ind AS 10 Events after the Reporting Period

Ind AS 10: Dividends and Going Concern after the Reporting Period

Updated 5 October 2026 · Fact-checked

Under Ind AS 10, a dividend declared after the reporting period is not recognised as a liability at the reporting date, because no obligation exists then. You only disclose it in the notes. If results or financial position deteriorate after the period so that going concern is no longer appropriate, you must stop using the going concern basis.

Understand Dividends and Going Concern after the Reporting Period

Start with the idea of an obligation. A liability exists at the reporting date only if the entity has a present obligation then. A dividend creates such an obligation only when it is appropriately authorised and no longer at the entity's discretion. If that happens after the reporting period, there was no obligation at the reporting date.

This is why Ind AS 10 says: if an entity declares dividends to holders of equity instruments after the reporting period, it does not recognise those dividends as a liability at the end of the reporting period. The dividend is a non-adjusting matter. You disclose the amount in the notes instead (as per Ind AS 1, the amount of dividends proposed or declared before the financial statements were approved for issue, but not recognised as a distribution, and the related amount per share).

Compare this with earlier Indian GAAP. Under old AS 4 (before its 2016 amendment), proposed dividend was provided for even if it was declared after the balance sheet date. Ind AS 10 does not allow a liability for dividends declared after the reporting period and requires disclosure only. The dividend is recognised in the period in which it is appropriately authorised, as a deduction from equity.

Going concern works differently. Here the standard is strict. If management determines after the reporting period either that it intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to do so, the standard requires a change in the basis of accounting. Deterioration in operating results and financial position after the reporting period can indicate this. It is a pervasive matter, so it is treated as requiring a change in basis, not just an adjustment of a few balances.

The key point is that going concern is not a non-adjusting event to be merely disclosed. The financial statements must no longer be prepared on a going concern basis. You then apply the break-up or other suitable basis and disclose that basis and why the entity is not regarded as a going concern.

Key rules to remember

Dividend declared after the reporting period: Liability at reporting date = Nil; disclose amount and per-share amount in notes; Applies to dividends to holders of equity instruments declared after the reporting period but before the financial statements are approved for issue.
Date of recognition of dividend: Recognise as a distribution (reduction in equity) in the period in which it is approved/declared as required; A dividend declared on or before the reporting date is a liability at that date. Dividends declared after it are not. Where shareholders' approval is needed, the obligation arises only on that approval (for example, at the AGM), not on the board's recommendation. Until then, you only disclose it.
Going concern rule: Intention or necessity to liquidate or cease trading after the period ⇒ do not prepare on going concern basis; Applies even if the deterioration happens after the reporting period but before approval of the statements.
Approval date cut-off: Events considered: reporting date to date financial statements are authorised for issue; Events after approval for issue are outside Ind AS 10 adjustment and disclosure scope for that set of statements.

How to solve Dividends and Going Concern after the Reporting Period questions

Use this method for any dividend or going concern question under Ind AS 10.

1Fix the reporting date and the date the financial statements were authorised for issue. Mark the event on this timeline.
2Check whether the event falls between those two dates. If not, it is outside Ind AS 10 for this set of statements.
3For a dividend, ask: was it declared (appropriately authorised) on or before the reporting date? If yes, recognise a liability. If after, no liability.
4For an after-period dividend, state the treatment: no liability, disclose the total and per-share amount in the notes.
5For a going concern case, ask whether the event shows that management intends to liquidate or cease trading, or has no realistic alternative. If yes, going concern basis is not appropriate.
6If the going concern basis fails, state that financial statements must be prepared on another basis, and disclose that basis and the reason.
7Give the journal or presentation effect if asked, and close with one line quoting the Ind AS 10 principle.

Quickest way: Date test and obligation test

When to use it: Use this when time is short, especially in case-scenario MCQs on dividends.

Find the date of declaration or approval of the dividend and compare it with the reporting date.
If declaration is after the reporting date, answer: no liability, disclosure only.
If the question mentions worsening results or plans to wind up after the period, answer: going concern basis no longer appropriate.
Write the one-line reason: no present obligation at the reporting date, or going concern effect is pervasive.

Common mistakes in Dividends and Going Concern after the Reporting Period

Providing for a proposed dividend as a liability in the balance sheet.
Students carry over the earlier Indian GAAP habit of showing proposed dividend under provisions.
Fix: Under Ind AS 10, a dividend declared after the reporting period gives no liability. Disclose it in the notes.
Treating a dividend declared before the reporting date but paid after it as a non-adjusting event.
Students focus on the payment date instead of the declaration date.
Fix: The test is declaration (obligation), not payment. If declared on or before the reporting date, it is a liability at that date.
Only disclosing the going concern issue while keeping the going concern basis.
Students treat every after-period negative event as non-adjusting.
Fix: When going concern is no longer appropriate, the basis of preparation must change. It is not a mere disclosure.
Forgetting to disclose the per-share amount of the dividend.
Students stop after saying no liability is recognised.
Fix: State both the amount of the dividend and the related amount per share in your answer.
Considering events after the date of approval of the financial statements.
Students ignore the cut-off date in the question.
Fix: Only events up to the date of authorisation for issue are considered. Later events are outside Ind AS 10 for those statements.

Worked examples

Example 1

A Ltd prepares Ind AS financial statements for the year ended 31 March 2027. The board approved the financial statements on 20 May 2027 and recommended a dividend of ₹2 per share on 5,00,000 equity shares at that meeting. The dividend is subject to shareholders' approval at the AGM in August 2027. How should A Ltd treat this dividend in the 2026-27 statements?

Show the solution

Reporting date is 31 March 2027. The dividend was recommended on 20 May 2027, which is after the reporting date.
Because the dividend needs shareholders' approval, the board's recommendation does not create an obligation. The obligation arises only when the shareholders approve it at the AGM in August 2027.
No present obligation existed at 31 March 2027, so under Ind AS 10 no liability is recognised at the reporting date.
Compute the amount to disclose: 5,00,000 shares × ₹2 = ₹10,00,000.
Disclose in the notes that a dividend of ₹2 per share, totalling ₹10,00,000, was proposed but not recognised as a distribution.
On AGM approval in August 2027, which falls in 2027-28, recognise the ₹10,00,000 as a distribution reducing equity in that year.

Answer: No liability is recognised at 31 March 2027. Disclose the proposed dividend of ₹10,00,000 (₹2 per share) in the notes. The obligation arises only on AGM approval in August 2027, so it is recognised as a distribution in equity in 2027-28. Until then it is disclosed only.

Example 2

B Ltd's reporting date is 31 March 2027 and its financial statements are to be authorised on 25 June 2027. In May 2027, a major customer, which gave most of its revenue, went into liquidation. Lenders also demanded repayment of all loans. On 10 June 2027 the board concluded it has no realistic alternative but to cease trading. The statements were prepared on a going concern basis. Advise.

Show the solution

The events occur on 10 June 2027, between the reporting date and the authorisation date, so Ind AS 10 applies.
The board has concluded it has no realistic alternative but to cease trading.
Under Ind AS 10, this means the going concern basis is no longer appropriate, even though the deterioration arose after the reporting period.
This is pervasive. It is not limited to adjusting individual balances.
B Ltd must not prepare its statements on a going concern basis. It must adopt another suitable basis, such as break-up basis, as applicable.
Disclose the fact that the statements are not prepared on a going concern basis, the basis used, and the reason the entity is not regarded as a going concern.

Answer: B Ltd should not prepare the 2026-27 statements on a going concern basis. It must change the basis of preparation and disclose the basis used and why the entity is not a going concern.

Exam tips

Always write the two dates first: reporting date and date of authorisation. Marks are often tied to this timeline.
In a dividend case, use the words 'no present obligation at the reporting date' and 'disclosure only'.
If the question asks for a comparison with earlier Indian GAAP, you can mention that under old AS 4 (before its 2016 amendment) proposed dividend was provided for even if declared after the balance sheet date, while Ind AS 10 gives no liability and requires disclosure only.
For going concern, mention that it changes the basis of accounting and is not just an adjusting or non-adjusting event.
Do the small arithmetic in dividend questions: shares × rate per share. Show it so you earn working marks.

Practice questions from Ind AS 10 Events after the Reporting Period

Dividends and Going Concern 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.

Dividends and Going Concern after the Reporting Period: frequently asked questions

Is a proposed dividend a liability under Ind AS 10?

No. A dividend declared after the reporting period is not a liability at the reporting date because no obligation existed then. You disclose it in the notes.

When is a dividend recognised under Ind AS?

It is recognised as a distribution to owners, reducing equity, in the period in which it is appropriately approved or declared. A liability arises at that time, not before.

How is Ind AS 10 different from earlier Indian GAAP on dividends?

Under old AS 4 (before its 2016 amendment), proposed dividend was provided for even if it was declared after the balance sheet date. Ind AS 10 gives no liability for dividends declared after the reporting period and requires disclosure only.

What happens if going concern fails after the reporting period?

The entity must not prepare its financial statements on a going concern basis if management intends to liquidate or cease trading, or has no realistic alternative. It must use another basis and disclose it.