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CMA Intermediate · Corporate Accounting and Auditing · Events after the Reporting Period (Ind AS 10)

Which of the following events occurring after the reporting period but before approval of the financial statements is an adjusting event under Ind AS 10?

The settlement of a court case confirming a present obligation at the reporting date is the adjusting event. It provides evidence of a condition existing at year end, so a provision is adjusted or recognised. Fire, discontinuance plans and new litigation arise after the period and are non-adjusting.

  1. ADestruction of a major production plant by fire after the reporting period
  2. BAnnouncement of a plan to discontinue an operation
  3. CSettlement of a court case confirming that the entity had a present obligation at the reporting dateCorrect
  4. DCommencement of major litigation arising solely from events after the reporting period

Explanation

Ind AS 10 lists settlement after the reporting period of a court case confirming a present obligation at the reporting date as adjusting. The entity adjusts or recognises a provision under Ind AS 37 rather than merely disclosing a contingent liability. The other three are listed as non-adjusting examples because the conditions arose after the reporting period.

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