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

Non-Adjusting Events and Disclosures under Ind AS 10

Updated 10 October 2026 · Fact-checked

A non-adjusting event is an event after the reporting period that indicates conditions that arose after that date. You do not change recognised amounts. If the event is material, you disclose its nature and an estimate of its financial effect, or state that no estimate can be made.

Understand Non-Adjusting Events and Disclosures

Ind AS 10 deals with events, favourable or unfavourable, that occur between the end of the reporting period and the date the Board of Directors approves the financial statements for issue. The standard splits them into two types. Adjusting events give evidence of conditions that existed at the reporting date. Non-adjusting events indicate conditions that arose after the reporting date.

The test is simple: when did the condition arise? If the cause existed on the balance sheet date, the event is adjusting. If the cause came into being afterwards, it is non-adjusting. The date of the event itself is not the test. The date of the underlying condition is.

For a non-adjusting event, the entity does not adjust the amounts recognised in its financial statements. The reason is that the statements show the position at the reporting date, and that position did not include the new circumstance. Adjusting for it would misstate the year just ended.

A classic case is a fall in the fair value of investments after the reporting date. It normally reflects circumstances that arose later, not the condition of the investments at the reporting date. So you do not adjust the carrying amount and you do not update the amounts disclosed as at the reporting date. You may still need extra disclosure if the event is material.

Silence can mislead users. So for each material category of non-adjusting event, the entity discloses (a) the nature of the event and (b) an estimate of its financial effect, or a statement that such an estimate cannot be made. The test of materiality is whether non-disclosure could reasonably be expected to influence decisions of primary users.

Key rules to remember

Rule for non-adjusting events: Non-adjusting event → no change to recognised amounts; disclose if material; Ind AS 10 para 10 says an entity shall not adjust amounts for non-adjusting events.
Disclosure required (para 21): Nature of the event + estimate of financial effect (or statement that it cannot be estimated); Required for each material category of non-adjusting event.
Definition test: Adjusting = evidence of conditions existing at reporting date; Non-adjusting = conditions arising after reporting date; The window runs from the end of the reporting period to the date the financial statements are approved for issue.
Examples in para 22: Major business combination or disposal of a major subsidiary; plan to discontinue an operation; major asset purchases, held-for-sale classification, disposals or expropriation; destruction of a major plant by fire; major restructuring; major share transactions; abnormally large changes in asset prices or exchange rates; tax rate or law changes; significant commitments or guarantees; major litigation arising solely from later events; These generally result in disclosure. The list is of examples, not exhaustive.
Share transactions exception: Bonus issues, share splits and reverse splits after the period are adjusted under Ind AS 33, not treated as ordinary non-adjusting disclosures; Para 22(f) excludes them because Ind AS 33 requires adjustment (EPS).

How to solve Non-Adjusting Events and Disclosures questions

Use this sequence for any question that asks you to classify an event or show its treatment.

1Fix the dates: reporting date, and date of approval of financial statements by the Board. Ignore events outside this window.
2For each event, ask when the underlying condition arose: on or before the reporting date, or after it.
3If the condition existed at the reporting date, treat it as adjusting and pass the adjustment. If it arose later, classify it as non-adjusting.
4For non-adjusting events, state clearly that no adjustment is made to recognised amounts.
5Judge materiality. If the event is material, write the disclosure: nature of the event and estimated financial effect, or a statement that it cannot be estimated.
6Check special cases: bonus issues, splits (adjust EPS under Ind AS 33), dividends declared after the period (not a liability) and going concern issues.
7Give the final answer in a short note format with the amount, if given, in rupees.

Quickest way: Cause-date test

When to use it: Use for MCQs and short classification questions where you must label events fast.

Ask only: did the cause exist on the balance sheet date?
Yes: adjusting. No: non-adjusting.
Typical non-adjusting cues: fire after year end, fall in market price of investments, new acquisition, new restructuring plan, new litigation from later events, large exchange rate swing, tax law change.
Typical adjusting cues: court settlement confirming an old obligation, customer insolvency, sale of inventory showing NRV, fraud or error discovered.
If non-adjusting and material, write: disclose nature and financial effect.

Common mistakes in Non-Adjusting Events and Disclosures

Adjusting the books for a fall in the market value of investments after year end.
Students see a loss and want to recognise it.
Fix: The fall reflects later circumstances. Do not adjust or update the reporting-date amounts. Disclose if material.
Classifying by the date of the event instead of the date of the condition.
Every event in the question happens after year end, so all look alike.
Fix: Ask when the cause arose. Customer bankruptcy confirms an earlier impairment, so it is adjusting. A later fire is a new condition.
Writing only 'disclose' without saying what to disclose.
Students remember the rule but not its content.
Fix: Always write both items: the nature of the event and an estimate of its financial effect, or a statement that no estimate can be made.
Disclosing every non-adjusting event regardless of size.
Misreading the list of examples as automatic.
Fix: Disclosure is for material categories, where omission could influence users' decisions. Comment on materiality.
Treating a bonus issue or share split after the period as an ordinary non-adjusting event.
Both are share transactions after year end.
Fix: Para 22(f) excludes them. Ind AS 33 requires EPS to be adjusted for them.
Passing an entry for a non-adjusting event.
Habit of journalising every event.
Fix: No journal entry in the year just ended. The treatment is a note only.

Worked examples

Example 1

The financial year of Sundaram Textiles Ltd ended on 31 March 2027. The Board approved the financial statements on 20 May 2027. On 10 April 2027, a fire destroyed a major production plant. Loss is estimated at ₹2,40,00,000, partly covered by insurance of ₹1,50,00,000. Explain the treatment.

Show the solution

Reporting date is 31 March 2027 and approval date is 20 May 2027. The fire on 10 April 2027 falls inside the window.
The plant was intact on 31 March 2027. The condition (destruction) arose after the reporting date.
So it is a non-adjusting event. Para 22(d) lists destruction of a major production plant by fire.
No adjustment is made to the plant or any other recognised amount in the 2026-27 statements.
The event is material, so disclose its nature and financial effect.
Estimated effect: loss ₹2,40,00,000 less insurance cover ₹1,50,00,000 = ₹90,00,000 net, subject to the insurer accepting the claim.

Answer: Non-adjusting event. No adjustment in the 2026-27 statements. Disclose in notes that a fire on 10 April 2027 destroyed a major plant, with an estimated loss of ₹2,40,00,000 and insurance cover of ₹1,50,00,000, giving an estimated net effect of ₹90,00,000.

Example 2

Classify each event for Kaveri Ltd (year ended 31 March 2027, accounts approved on 25 May 2027) and state the treatment: (i) On 15 April 2027 the market value of its quoted investments fell by ₹8,00,000. (ii) On 30 April 2027 a customer, whose debt of ₹3,00,000 was outstanding at 31 March 2027, was declared insolvent. (iii) On 5 May 2027 the Board announced a major restructuring.

Show the solution

(i) The fall in value arose from later circumstances. It is non-adjusting. Do not adjust the investments or update year-end disclosed amounts. Disclose if material: nature and the ₹8,00,000 fall.
(ii) Customer insolvency usually confirms the customer was credit-impaired at the reporting date. It is adjusting. Recognise the impairment on the ₹3,00,000 debt to the extent not recoverable.
(iii) Announcing a major restructuring after the period is listed in para 22(e). It is non-adjusting. Make no provision in 2026-27. Disclose its nature and estimated financial effect, or state that it cannot be estimated.

Answer: (i) Non-adjusting: disclose only if material, with the ₹8,00,000 effect. (ii) Adjusting: adjust for the expected loss on the ₹3,00,000 receivable. (iii) Non-adjusting: no adjustment, disclose nature and estimated financial effect or state that no estimate can be made.

Exam tips

In MCQs, hunt for the word 'after' and then test the cause date. Fire, share issue, takeover, exchange rate swing and fall in investment value are the usual non-adjusting cues.
In written answers, give three parts: classification with reason, treatment (no adjustment), and disclosure (nature and financial effect). This earns step marks.
Always add the alternative: 'or a statement that such an estimate cannot be made'.
Quote para 22 examples from memory, at least five, for theory questions asking for examples.
Contrast with adjusting events in a two-column answer when asked for the difference.

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

Non-Adjusting Events and Disclosures in other exams

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

Non-Adjusting Events and Disclosures: frequently asked questions

What are examples of non-adjusting events under Ind AS 10?

Examples include a major business combination, a plan to discontinue an operation, destruction of a major plant by fire, a major restructuring, abnormally large changes in asset prices or exchange rates, and changes in tax rates enacted after the period. Commencing major litigation arising solely from later events and significant new guarantees also qualify.

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

Adjusting events give evidence of conditions that existed at the end of the reporting period, so amounts are adjusted. Non-adjusting events indicate conditions that arose after the reporting period, so amounts are not adjusted but material ones are disclosed.

What must be disclosed for a non-adjusting event?

For each material category, disclose the nature of the event and an estimate of its financial effect. If an estimate cannot be made, state that fact.

Is a fall in the market value of investments after year end adjusted?

No. It normally reflects circumstances that arose after the reporting date. The recognised amounts are not adjusted and the reporting-date amounts disclosed are not updated. Additional disclosure may be needed if material.