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

Sagar Infra Ltd. reports at 31 March 2026, with financial statements approved by its Board on 28 May 2026. On 20 April 2026 the Board announced a plan to discontinue its loss-making real estate division, and on 10 May 2026 the government enacted a change in tax rate that significantly affects its deferred tax balances. Which statement is correct?

Both events are non-adjusting events, and each would generally result in disclosure. Announcing a plan to discontinue an operation and a significant tax rate change enacted after the reporting period indicate conditions arising after year-end. The recognised amounts are not adjusted, but the nature and effect are disclosed.

  1. ABoth events are adjusting events, and the financial statements should be adjusted
  2. BThe discontinuation plan is adjusting, while the tax rate change is non-adjusting
  3. CBoth events are non-adjusting events, and disclosure is generally required for eachCorrect
  4. DThe discontinuation plan is non-adjusting, while the tax rate change is adjusting

Explanation

Announcing a plan to discontinue an operation is listed as a non-adjusting event that would generally result in disclosure. Changes in tax rates or tax laws enacted or announced after the reporting period that have a significant effect on current and deferred tax assets and liabilities are also non-adjusting events requiring disclosure. Neither provides evidence of conditions existing at 31 March 2026, so no adjustment is made. The deferred tax balances therefore stay measured at rates enacted at the reporting date.

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