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

Under Ind AS 10, which of the following events occurring after the reporting period but before the financial statements are approved for issue is an adjusting event?

The bankruptcy of a major customer after the reporting period is an adjusting event, because it usually confirms that the receivable was credit-impaired at the reporting date. The other events reflect conditions arising after the reporting period and call only for disclosure.

  1. ADestruction of a major production plant by a fire after the reporting period
  2. BBankruptcy of a major customer, confirming that its receivable was credit-impaired at the reporting dateCorrect
  3. CAnnouncement of a plan to discontinue an operation
  4. DCommencement of major litigation arising solely out of events after the reporting period

Explanation

The bankruptcy of a customer after the reporting period usually confirms that the customer was credit-impaired at the reporting date, so it is an adjusting event. The fire, the discontinuation plan and litigation arising solely from later events indicate conditions that arose after the reporting period and are non-adjusting events requiring disclosure only.

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