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CA Final · Financial Reporting · Ind AS 10 Events after the Reporting Period

Kaveri Foods Ltd. closes its books on 31 March 2026, and its Board approved the financial statements on 25 June 2026. On 12 April 2026, a fire destroyed its main production plant, which had a carrying amount of Rs 8 crore, and no insurance cover is available. Which treatment is correct under Ind AS 10?

Kaveri should not adjust the amounts recognised for the year ended 31 March 2026. The fire after the reporting period is a non-adjusting event, indicating a condition arising later. Because the plant is major, the company should disclose the nature of the event and an estimate of its financial effect.

  1. AWrite off Rs 8 crore in the year ended 31 March 2026 as an adjusting event
  2. BDo not adjust the amounts recognised, but disclose the nature of the event and an estimate of its financial effectCorrect
  3. CCreate a provision of Rs 8 crore as at 31 March 2026 and disclose nothing further
  4. DIgnore the event, since only events before the reporting date matter

Explanation

The destruction of a major production plant by a fire after the reporting period is a non-adjusting event. The fire indicates a condition that arose after the reporting period, so the amounts recognised are not adjusted. Because it is material, the nature of the event and an estimate of its financial effect are disclosed. Writing off Rs 8 crore in FY 2025-26 wrongly treats it as adjusting.

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