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

Vindhya Steels Ltd. has a 31 March 2026 reporting date, and its financial statements were approved by the Board on 28 June 2026. Which one of the following events occurring between 1 April 2026 and 28 June 2026 is an ADJUSTING event?

The court settlement confirming a present obligation at 31 March 2026 is the adjusting event. It provides evidence of a condition existing at the reporting date, so the company should recognise a provision rather than merely disclosing a contingent liability. The other events indicate conditions arising after the reporting period.

  1. AAnnouncement of a major restructuring plan, with implementation beginning in May 2026
  2. BA court settlement in May 2026 confirming that the company had a present obligation at 31 March 2026 for a case on which only a contingent liability had been disclosedCorrect
  3. CA major business combination completed in June 2026
  4. DAn abnormally large fall in the rupee in June 2026

Explanation

A court settlement after the reporting period that confirms a present obligation at the reporting date is an adjusting event. The company must recognise a provision and not merely disclose a contingent liability. A major restructuring announcement, a major business combination and abnormally large exchange rate changes are all listed non-adjusting events and are only disclosed.

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