Section 2800: Subsequent Events
International Accounting Standard 10
Events after the Reporting Period
1. First version of IAS 10
"Contingencies and events occurring after the balance sheet date" issued in June 1978
2. Revisions
September 1998: IAS 37 replaced parts of IAS 10
May 1999: "Events after the balance sheet date"
December 2003: "Events after the balance sheet date"
September 2007: Revised version of IAS 1 changed the title of IAS 10 to
"Events after the reporting period"
[U.S. GAAP Codification Topic]
855 Subsequent events
[U.S. GAAP before the Codification]
SFAS 165, May 2009, Subsequent events
AICPA, Codification of Statements on Auditing Standards, AU Section 850, Subsequent Events
3. Events after the reporting period, IAS 10.3
Events that occur between (1) and (2)
(1) end of reporting period
(2) date of financial statements authorised for issue
4. Subsequent events: U.S. GAAP, ASC 855-10
AICPA Codification of Statements on Auditing Standards
AU Section 560, Subsequent events
Events occurred
(1) subsequent to the balance sheet date, but
(2) prior to the issuance of financial statements
5. Authorisation for issue, IAS 10.5
Financial statements authorised for issue,
--> when board of directors authorises the issue
If Board approved on 2 March, 2011
Shareholders approved on 8 March, 2011,
--> Financial statements were authorised for issue, on 2 March, 2011
6. Authorisation for issue: U.S. GAAP, ASC 855-10-s99-2
SEC Staff Announcement at EITF meeting
Financial statements are issued,
on the date financial statements are distributed for general use,
in compliance with GAAP and GAAS
7. Examples of adjusting events, IAS 10.8
(1) a court case was settled, confirming the obligation at the end of reporting period
(2) additional information indicating an asset impairment, at the end of reporting period
(2a) if a customer files bankruptcy after the reporting period,
--> trade receivables at the end of reporting period need adjustments
(3) costs of assets purchased before the end of reporting period
--> were determined after the reporting period
(4) there was an obligation for profit-sharing and bonus at the end of reporting period,
--> and the amounts were determined after the reporting period
(5) errors or fraud affecting financial statements at the end of reporting period
--> were discovered after the reporting period
8. Examples of non-adjusting events, IAS 10.10, 22
(1) when market value of investments declined after the reporting period,
--> amounts recognised in financial statements are not adjusted.
(2) business combination
(3) sale of a subsidiary
(4) major purchase or disposal of assets
(5) major restructuring
(6) significant commitments
(7) major litigation due to the events occurred after the reporting period
9. Dividends declared after the reporting period, IAS 10.12, 13
For dividends declared after the reporting period,
(1) such dividends are not recognised as a liability, at the end of reporting period
(2) such dividends are disclosed in the notes
10. Going concern, IAS 10.14
Financial statements are not prepared, on a going concern basis,
if the following occurred after the reporting period:
(1) management intends to liquidate
(2) management intends to cease trading
(3) no realistic alternative to liquation
11. Financial statements are prepared on a going concern basis,
unless the following occurred: IAS 1.25
(1) management intends to liquidate
(2) management intends to cease trading
(3) no realistic alternative to liquation
12. Going concern assumption, IAS 10.15
If going concern assumption is not appropriate
--> do not prepare financial statements, on a going concern basis.
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