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

Meera Pharma Ltd has a reporting date of 31 March 2026 and its Board approves the financial statements on 25 June 2026. On 12 May 2026 a fire destroyed a major production plant. The plant was in good condition and fully operational at 31 March 2026. Which treatment is correct?

The amounts should not be adjusted, but the event should be disclosed. Destruction of a major plant by fire after the reporting period indicates a condition arising after that date, so it is a non-adjusting event requiring disclosure of its nature and estimated financial effect.

  1. AAdjust the carrying amount of the plant to nil in the 31 March 2026 financial statements
  2. BDo not adjust the amounts, but disclose the nature of the event and an estimate of its financial effectCorrect
  3. CNeither adjust nor disclose, as the fire occurred in the next financial year
  4. DRecognise a provision at 31 March 2026 for the estimated loss

Explanation

Destruction of a major production plant by fire after the reporting period is listed as a non-adjusting event. The fire is a condition that arose after the reporting date, so amounts are not adjusted, but the event is disclosed as it is material. Adjusting the plant is wrong because it was intact at the reporting date.

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