ACCA Applied Knowledge · Financial Accounting · Events after the reporting period
Which of the following events occurring after the reporting period but before authorisation of the financial statements would normally require disclosure as a non-adjusting event, if material?
A post-year-end fall in the market value of investments is a non-adjusting event, since it reflects conditions arising after the reporting date. It is disclosed if material, with the nature and an estimate of the financial effect. The other events are adjusting.
- AThe settlement of a court case for which a provision was recognised at the reporting date
- BThe discovery of fraud showing the financial statements were incorrect
- CA fall in the market value of investments arising from market conditions after the reporting dateCorrect
- DThe determination of the sales proceeds of an asset sold before the year end
Explanation
A fall in market value after the reporting date reflects conditions arising afterwards, so it is non-adjusting and disclosed if material. The court settlement, the discovery of fraud and the sale proceeds determination all give evidence about conditions existing at the reporting date, so they are adjusting.
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