Skip to content

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

After the reporting period but before the Board approved the financial statements, a company's major production plant was destroyed by fire. How does Ind AS 10 require this to be treated?

The company should not adjust the recognised amounts but should disclose the event. Destruction of a major production plant by fire after the reporting period is a non-adjusting event, because it indicates a condition that arose after the reporting period and generally requires disclosure.

  1. AAdjust the carrying amount of the plant in the reporting-period financial statements
  2. BDo not adjust the amounts recognised; disclose it as a non-adjusting eventCorrect
  3. CRecognise a provision for the loss at the reporting date
  4. DIgnore it completely, as it occurred after the reporting period

Explanation

Destruction of a major production plant by fire after the reporting period is listed as an example of a non-adjusting event that would generally result in disclosure. The standard says an entity shall not adjust recognised amounts for non-adjusting events. Option D is wrong because disclosure is generally needed.

Did you get it right without looking?

One question tells you little. A timed set on Events after the Reporting Period (Ind AS 10) shows your real accuracy, how long you take and where you lose marks.

Practise Events after the Reporting Period (Ind AS 10)Free diagnostic mock

More Events after the Reporting Period (Ind AS 10) questions