Skip to content

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

Tarang Industries Ltd. has a reporting date of 31 March 2026, with financial statements approved on 30 June 2026. It had a long-term loan with a covenant, and on 28 February 2026 it breached a material covenant, which made the loan repayable on demand at the reporting date. On 15 May 2026, before approval, the lender agreed in writing not to demand repayment because of the breach. Applying the text as notified, for annual periods before 1 April 2026, how is the lender's agreement treated?

The lender's agreement is treated as an adjusting event. The standard says that when a material loan provision is breached on or before the reporting date and the loan becomes payable on demand, the lender's agreement before approval of the statements not to demand payment is an adjusting event.

  1. AAs a non-adjusting event, so the loan remains classified as current at 31 March 2026
  2. BAs an adjusting event, based on the specific provision regarding such breachesCorrect
  3. CAs an event requiring no consideration, because it relates to a financing arrangement
  4. DAs an adjusting event only if the lender agreed on or before 31 March 2026

Explanation

The definition of events after the reporting period states that where a material provision of a long-term loan is breached on or before the reporting date, making the loan payable on demand, the lender's agreement before approval not to demand payment is an adjusting event. The agreement on 15 May 2026 precedes approval on 30 June 2026, so it qualifies. Treating it as non-adjusting ignores this specific provision.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 10 Events after the Reporting Period shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 10 Events after the Reporting PeriodFree diagnostic mock

More Ind AS 10 Events after the Reporting Period questions