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

Neelkamal Foods Ltd. has a reporting date of 31 March 2026, and the Board approved the statements on 22 May 2026. Which one of the following events occurring between these dates would require adjustment of the amounts recognised in the financial statements?

The discovery of the employee fraud that shows inventory was overstated at 31 March 2026 requires adjustment. Discovery of fraud or errors showing the statements are incorrect is an adjusting event. The restructuring announcement, large exchange rate movement and major asset purchase are non-adjusting and only disclosed.

  1. AAnnouncement of a major restructuring plan on 10 May 2026
  2. BDiscovery on 12 May 2026 of a fraud by an employee, which shows that the 31 March 2026 inventory figure was overstatedCorrect
  3. CAn abnormally large fall in the rupee exchange rate on 15 May 2026
  4. DA major purchase of assets completed on 18 May 2026

Explanation

The discovery of fraud or errors showing that the financial statements are incorrect is an adjusting event, so the inventory is corrected. A restructuring announcement, abnormally large exchange rate changes and major asset purchases after the reporting period are listed as non-adjusting events that are only disclosed. Those distractors reflect conditions arising after the year end.

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