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

A company's reporting period ended on 31 March. Its Board approved the financial statements on 20 May. On 10 May, a major customer of the company was declared bankrupt; the customer's balance outstanding at 31 March was Rs 8,00,000 and was recorded as fully good. How should the company treat this under Ind AS 10?

The company should adjust its financial statements. The customer's bankruptcy on 10 May falls before Board approval on 20 May and usually confirms that the receivable was credit-impaired at 31 March. It is therefore an adjusting event, not a disclosure-only matter.

  1. ADisclose only, as the bankruptcy occurred after the reporting period
  2. BAdjust the financial statements, as the bankruptcy usually confirms the customer was credit-impaired at the end of the reporting periodCorrect
  3. CIgnore it, since the event occurred before the AGM
  4. DAdjust only in the next year's financial statements

Explanation

The event falls between 31 March and 20 May, so it is an event after the reporting period. Ind AS 10 gives customer bankruptcy after the period as an example usually confirming credit impairment at the reporting date. It is therefore adjusting, and the Rs 8,00,000 receivable must be adjusted. Disclosure-only is the treatment for non-adjusting events.

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