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

Which of the following events occurring after the reporting date but before the financial statements are authorised for issue is an adjusting event under IAS 10?

The customer's insolvency is an adjusting event, because it gives further evidence that the receivable was already uncollectable at the reporting date. The fire, restructuring announcement and dividend declaration arise from conditions after the reporting date, so they are non-adjusting events.

  1. AA fire destroys the company's main warehouse
  2. BThe company announces a major restructuring plan
  3. CA customer is declared insolvent, and the receivable existed at the reporting dateCorrect
  4. DThe directors declare an ordinary dividend

Explanation

The insolvency of a customer after the reporting date provides evidence of conditions that existed at the reporting date (the debt was already impaired), so it is adjusting. A fire, a new restructuring announcement and a dividend declaration relate to conditions arising after the reporting date and are non-adjusting.

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