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ACCA Applied Knowledge · Financial Accounting · Events after the reporting period

Which of the following correctly describes an adjusting event after the reporting period under IAS 10?

An adjusting event is one that provides evidence of conditions that existed at the end of the reporting period, so the recognised amounts are changed. Events reflecting conditions arising afterwards are non-adjusting, regardless of materiality or whether profit falls.

  1. AAn event that provides evidence of conditions that existed at the end of the reporting periodCorrect
  2. BAn event that indicates conditions that arose after the end of the reporting period
  3. CAny event that reduces the profit of the entity
  4. DAny event that is material to the users of the financial statements

Explanation

Adjusting events provide further evidence of conditions existing at the reporting date, and the amounts in the financial statements are adjusted. Events indicating conditions arising afterwards are non-adjusting. Materiality or effect on profit does not determine classification.

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