ACCA Applied Knowledge · Financial Accounting · Events after the reporting period
Which of the following events occurring after the reporting period but before the financial statements are authorised for issue is an adjusting event under IAS 10?
The insolvency of a customer whose receivable existed at the year-end is an adjusting event, because it gives further evidence of conditions at the reporting date, namely that the debt was already doubtful. The other events arose after the year-end and are non-adjusting.
- AA fire destroying inventory held at the year-end warehouse
- BThe insolvency of a major customer, where the receivable existed at the reporting date and the customer's financial difficulty was already evidentCorrect
- CThe announcement of a plan to restructure the business
- DA fall in the market value of investments after the year-end
Explanation
An event that provides further evidence of conditions existing at the reporting date is adjusting. The customer's bankruptcy confirms the receivable was impaired at the year-end. A fire, a restructuring announcement and a fall in market value arise from conditions that arose after the reporting date, so they are non-adjusting.
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