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

Kaveri Textiles Ltd. holds quoted investments carried at Rs 80 lakh at fair value on 31 March. Due to a market fall in the following month, their fair value dropped to Rs 62 lakh before the financial statements were approved. Which treatment is consistent with Ind AS 10?

The fall in fair value after the reporting date is a non-adjusting event. The investments stay at Rs 80 lakh and the disclosed 31 March amounts are not updated, though additional disclosure of nature and effect is given if the decline is material.

  1. AReduce the investments to Rs 62 lakh and charge Rs 18 lakh to the year ended 31 March
  2. BKeep Rs 80 lakh, and disclose additional information if the decline is material, without updating the 31 March amountsCorrect
  3. CKeep Rs 80 lakh and make no disclosure under any circumstances because the decline is a post-year event
  4. DRestate the 31 March amounts disclosed for the investments to Rs 62 lakh in the notes only

Explanation

A decline in fair value after the reporting period normally reflects circumstances arising subsequently, so it is non-adjusting. The Rs 80 lakh stays, and the amounts disclosed as at the reporting date are not updated. Additional disclosure of the nature and financial effect may be needed if the event is material. Writing down to Rs 62 lakh is wrong because it adjusts for a non-adjusting event.

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