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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 a non-adjusting event?

A fall in the market value of investments after the year end is non-adjusting, because it reflects conditions arising after the reporting date. Insolvency of an existing debtor, court settlements and discovery of fraud provide evidence of year-end conditions or errors and are adjusting.

  1. AA customer is declared insolvent, and the receivable existed at the year end
  2. BA court case settled for a different amount from the provision made at the year end
  3. CThe discovery of a fraud that occurred during the year
  4. DA fall in the market value of investments occurring after the year endCorrect

Explanation

A post-year-end fall in market value reflects conditions arising after the reporting date, so it is non-adjusting. The insolvency and the court settlement give evidence of conditions existing at the year end, and the fraud shows the financial statements were incorrect, so those are adjusting.

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