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

Kaveri Pharma Ltd. closed its books on 31 March 2026, and the Board approved the financial statements on 25 May 2026. A customer, Sharma Distributors, owed Rs 40 lakh at 31 March 2026, and no impairment allowance was made. On 10 May 2026 Sharma Distributors was declared bankrupt. Which treatment is correct under Ind AS 10?

It is an adjusting event. A customer's bankruptcy after the reporting period usually confirms that the receivable was credit-impaired at the reporting date, so the company must adjust the 2025-26 financial statements to recognise the impairment, not merely disclose it.

  1. ADisclose only, since the bankruptcy happened after the reporting period
  2. BTreat it as an adjusting event and recognise the impairment of the receivable in 2025-26 financial statementsCorrect
  3. CRecognise the loss in the financial year 2026-27 when the bankruptcy occurred
  4. DAdjust only if the bankruptcy is declared before the end of the reporting period

Explanation

Bankruptcy of a customer after the reporting period usually confirms the customer was credit-impaired at the end of the reporting period. This is an adjusting event, so the receivable is adjusted. Disclosure only is wrong because the event gives evidence of a year-end condition.

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