Skip to content

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

Veda Textiles Ltd. has a reporting date of 31 March 2026. Its Board approved the financial statements on 20 May 2026. On 5 May 2026, a customer, Rajan Garments Ltd., to which Veda had sold goods on credit in February 2026, was declared bankrupt. Rajan's financial position had been deteriorating since January 2026. How should Veda treat the bankruptcy in its 31 March 2026 financial statements?

The bankruptcy is an adjusting event. A customer's bankruptcy after the reporting period usually confirms that the customer was already credit-impaired at the reporting date, and here its finances had worsened before 31 March. Veda must therefore adjust the impairment on the receivable in its financial statements.

  1. AAs an adjusting event, because it usually confirms that the customer was credit-impaired at the end of the reporting periodCorrect
  2. BAs a non-adjusting event, because the bankruptcy order was passed after the reporting date
  3. CAs a non-adjusting event, to be disclosed only if the receivable exceeds 10% of revenue
  4. DAs an event requiring no recognition or disclosure because it relates to a single customer

Explanation

The bankruptcy of a customer after the reporting period usually confirms that the customer was credit-impaired at the end of the reporting period. Here the deterioration began before 31 March, so the condition existed at the reporting date. The receivable's impairment is therefore adjusted. Treating it as non-adjusting ignores that the order only provides evidence of an existing condition.

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