Corporate Accounting and Auditing · Events after the Reporting Period (Ind AS 10)

Adjusting Events after the Reporting Period under Ind AS 10

Updated 10 October 2026 · Fact-checked

An adjusting event is an event after the reporting period, up to the date the financial statements are authorised for issue, that gives evidence of a condition that already existed at the reporting date. You change the recognised amounts in the financial statements. Examples are a court case settled, a debtor's insolvency and fraud discovered.

Understand Adjusting Events after the Reporting Period

Financial statements are prepared as at the reporting date, for example 31 March. They are approved a few weeks or months later. In between, new facts may come to light. Ind AS 10 tells you which of these facts must change the numbers.

The events after the reporting period are favourable or unfavourable events that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Events are considered up to the date the financial statements are authorised for issue. For a company, this is normally when the board approves them.

An event is adjusting if it provides evidence of conditions that existed at the end of the reporting period. The condition was already there. The event only confirms it or tells you the correct amount. So you adjust the amounts already recognised, and you recognise items that were not recognised before.

Think of it this way: the customer was already in financial trouble on 31 March. His insolvency in April only proves it. So the loss belongs to the year ending 31 March. Compare a fire in April. The fire did not exist on 31 March, so it is non-adjusting and is only disclosed if material.

Common adjusting events: settlement of a court case after the reporting period that confirms a present obligation at the reporting date; information that an asset was impaired at the reporting date, such as a customer's bankruptcy or a sale of inventory at a price below cost; determination after the period of the cost of assets bought, or proceeds of assets sold, before the period end; determination of profit-sharing or bonus payments for which there was a present obligation at the reporting date; and discovery of fraud or errors showing the financial statements are incorrect.

Key rules to remember

Period covered: Reporting date → date financial statements are authorised for issue; Only events in this window are considered under Ind AS 10.
Adjusting event test: Evidence of a condition existing at the reporting date → adjust recognised amounts; If the condition arose after the reporting date, it is non-adjusting.
Court case: Settlement after the period confirming an existing obligation → adjust provision, or recognise a liability if none was made; Adjust to the settled amount. Do not just disclose.
Insolvent debtor: Bad debt = balance outstanding − amount expected to be recovered; Adjust the loss in the year ended on the reporting date. Reduce receivables and charge the loss to profit or loss.
Going concern override: Deterioration after the period indicating no going concern → do not prepare on going concern basis; This applies even if the event is not otherwise adjusting. It is covered under Dividends and Going Concern after the Reporting Period.

How to solve Adjusting Events after the Reporting Period questions

Use the same sequence for every question on events after the reporting period.

1Write down the reporting date and the date of authorisation for issue.
2List each event and its date. Drop any event outside the window.
3For each event ask: did the condition exist at the reporting date? If yes, it is adjusting.
4For adjusting events, work out the correct amount. Compare it with what was already recognised in the books.
5Pass the adjusting entry, or adjust the figures directly: profit before tax, receivables, provisions, inventories, and tax effect if the question gives a rate.
6Recompute the revised profit or balance sheet figure and show it clearly.
7For non-adjusting events in the same question, state that no adjustment is made and that disclosure is required if material.

Quickest way: Date and Condition Test

When to use it: Use in MCQs and in short multi-event problems where you must pick which items change profit.

Tick if the event falls before the authorisation date.
Ask one question: was the cause there on the reporting date?
Bad news about an old cause, such as a debtor already in trouble, a pending case or an old sale, is adjusting.
A new cause, such as a fire, a new acquisition, a new share issue or a fall in the market value of investments after the period, is non-adjusting. Be careful with inventory: a sale of inventory below cost after the period is evidence of net realisable value at the reporting date, so it is adjusting.
Adjust profit only for the difference between the amount recognised and the correct amount.

Common mistakes in Adjusting Events after the Reporting Period

Treating every unfavourable event after the reporting date as adjusting.
Students link bad news with a loss to be booked.
Fix: Apply the condition test. A fire or a flood after the date is non-adjusting, however large the loss.
Adjusting for the full amount of a court settlement instead of the difference from the existing provision.
Students forget that a provision may already be in the books.
Fix: Extra charge = settled amount − provision already made. If no provision exists, charge the whole amount.
Writing off the whole debtor balance when only part is irrecoverable.
The word insolvency suggests nothing will be recovered.
Fix: Use the expected recovery given in the question. Loss = balance − expected recovery, adjusted for any existing allowance.
Ignoring the tax effect when the question gives a tax rate.
Students stop at profit before tax.
Fix: Adjust profit before tax first, then adjust tax at the stated rate if asked for profit after tax.
Considering events after the authorisation date.
Students read all dates in the question as relevant.
Fix: Mark the authorisation date first. Events after it are outside Ind AS 10.

Worked examples

Example 1

Sarvottam Ltd closed its books on 31 March 2027. The financial statements were authorised for issue on 20 May 2027. Trade receivables include ₹8,00,000 due from Kiran Traders. On 10 April 2027 Kiran Traders was declared insolvent, and the liquidator indicated that only 25% of the dues would be paid. No allowance had been made against this debt. Profit before tax before this adjustment is ₹40,00,000. Show the treatment.

Show the solution

Reporting date is 31 March 2027. Authorisation date is 20 May 2027. The event on 10 April 2027 falls within the window.
The debtor's financial difficulty existed at the reporting date. The insolvency confirms it, so this is an adjusting event.
Expected recovery = 25% × ₹8,00,000 = ₹2,00,000.
Loss to be recognised = ₹8,00,000 − ₹2,00,000 = ₹6,00,000.
Entry: Bad debts / Impairment loss on receivables A/c Dr ₹6,00,000 to Trade receivables (or Allowance for credit losses) A/c ₹6,00,000.
Revised profit before tax = ₹40,00,000 − ₹6,00,000 = ₹34,00,000.

Answer: Adjusting event. Recognise a loss of ₹6,00,000 in the year ended 31 March 2027. Revised profit before tax is ₹34,00,000.

Example 2

Bharat Engineering Ltd has a year ended 31 March 2027. Financial statements were authorised on 30 June 2027. A customer had filed a claim for ₹10,00,000 for a defect in goods sold in January 2027. The company had made a provision of ₹4,00,000 at the year end. On 15 May 2027 the court ordered the company to pay ₹7,00,000. Separately, on 5 June 2027 a fire destroyed inventory worth ₹12,00,000, not covered by insurance. Profit before tax before any adjustment is ₹50,00,000. Ignore tax. Show the treatment.

Show the solution

Both events fall before 30 June 2027, so both are within the window.
Court order: the claim related to a sale in January 2027, so the obligation existed at the reporting date. The judgment confirms the amount. Adjusting event.
Additional charge = ₹7,00,000 − ₹4,00,000 = ₹3,00,000.
Entry: Provision for claim / Expenses A/c Dr ₹3,00,000 to Provision for claim A/c ₹3,00,000. The provision becomes ₹7,00,000.
Fire on 5 June 2027: the fire did not exist at the reporting date. Non-adjusting event. No change to the figures.
Disclose the fire in the notes: nature of the event and an estimate of its financial effect of ₹12,00,000, if material.
Revised profit before tax = ₹50,00,000 − ₹3,00,000 = ₹47,00,000.

Answer: Court settlement is adjusting: extra charge of ₹3,00,000, so profit before tax is ₹47,00,000. The fire loss of ₹12,00,000 is non-adjusting and is only disclosed.

Exam tips

Always write the reporting date and authorisation date at the top of your answer. It earns marks and prevents errors.
In written answers, give a reason for each classification in one line: condition existed or did not exist at the reporting date.
For MCQs, spot the cause. Insolvency, a settled case, fraud tied to earlier periods and a sale of inventory below cost after the period are usually adjusting. Fire, a new share issue, and a fall in the market value of investments or changes in exchange rates after the period are usually non-adjusting.
Show the adjusting journal entry and the revised profit. Step marks are given for the amount of the adjustment, not only the final figure.
If the question includes tax, adjust the profit before tax first and then the tax at the given rate.

Practice questions from Events after the Reporting Period (Ind AS 10)

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?

Settlement of a court case confirming an existing obligation, insolvency of a customer whose balance was outstanding at the reporting date, sale of inventory after the period at a price below cost, and discovery of fraud or errors. In each case the condition existed at the reporting date.

How do I treat the insolvency of a debtor after the balance sheet date?

Treat it as an adjusting event if the balance was outstanding at the reporting date. Estimate the amount recoverable and charge the rest as a loss in the year just ended. Reduce receivables by that loss.

Until which date are events after the reporting period considered?

Until the date the financial statements are authorised for issue. Events after that date are not adjusted for under Ind AS 10.

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

An adjusting event gives 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 it is material.