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    Chapter 12 Events After The Reporting Period PDF

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    Athena Lansang
    This will help the accounting students to review for their upcoming topic events after the reporting period.

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    Chapter 12 Events After The Reporting Period PDF

    Uploaded by

    Athena Lansang
    91 views4 pages
    This will help the accounting students to review for their upcoming topic events after the reporting period.

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    CHAPTER-12-EVENTS-AFTER-THE-REPORTING-PERIOD-PDF

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    This will help the accounting students to review for their upcoming topic events after the reporting period.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    91 views4 pages

    Chapter 12 Events After The Reporting Period PDF

    Uploaded by

    Athena Lansang
    This will help the accounting students to review for their upcoming topic events after the reporting period.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    CHAPTER 12

    EVENTS AFTER THE REPORTING PERIOD

    PAS 10,paragraph 3,defines events after the reporting period as those events,whether favorable or
    unfavorable,that occur between the end of reporting period and the date on which the financial
    statements are authorized for issue.

    Events after the reporting period are also known as subsequent events.

    Such events may require either adjustment or disclosute.

    Types of events after the reporting period

    a. Adjusting events after the reporting period are those that provide evidence of conditions that exist at
    the end of reporting period.

    b. Nonadjusting events after reporting period are those that are indicative of conditions that arise after
    the end of reporting period.

    It is appropriate to adjust the financial statements for all events that offer clarity concerning the
    conditions that existed at the end of reporting period and that occur prior to the date the financial
    statements are authorized for issue.

    Accordingly, an entity must adjust the amounts recognized in the financial statements for adjusting
    events that provide evidence of conditions that existed at the end of reporting period.

    However,an entity does not recognize events after the reporting period that relate to conditions that
    only arose after the reporting period.

    The entity is required only to disclose significant nonadjusting events.

    Examples of adjusting events

    Examples of adjusting events after the reporting period which require the entity to adjust the financial
    statemente are:

    1. Settlement after the reporting period of a court case because it confirms that the entity already had a
    present obligation at the end of reporting period.

    2. Bankruptcy of a customer which occurs after the reporting period.

    3. Sale of inventories after the reporting period may give evidence about the net realizable value at
    reporting date.

    4. The determination after the reporting period of the cost of asset purchased or the proceeds from
    asset sold before the end of reporting period.

    5. The determination after the reporting period of the profit sharing or bonus payment if the entity has
    the present obligation at the end of reporting period to make such payment.

    6. The discovery of fraud or errors that show the financial statements were incorrect.
    Examples of nonadjusting events

    1.Business combination afterthe reporting period

    2. Plan to discontinue an operation

    3.Major purchase and disposalof asset or expropriation of major asset by government

    4.Destruction of a major production plant by a fire after the reporting period

    5.Major ordinary share transactions and potential ordinary share transactions after the reporting period

    6.Announcing or commencing the implementation of a major restructuring

    7.Abnormally large changes after the reporting period in asset prices or foreign exchange rates

    8. Entering into significant commitments or contingent liabilities, for example, by issuing guarantees

    9.Commencing major litigation arising solely from events that occurred after the reporting period

    10. Change in tax rate enacted or announced after the end of reporting period that has a significant
    effect on current and deferred tax asset and liability

    Financial statements authorized for issue

    Financial statements are authorized for issue when the board of directors reviews the financial
    statements and authorizes them issue.

    In some cases, an entity is required to submit the financial statements to the shareholders for approval
    after the financial statements have been issued.

    In such cases, the financial statements are authorized for issue on the date of issue by the board of
    directors and not on the date when shareholders approve the financial statements.

    1. Events after the reporting period are favorable or unfavorable events that occur between

    The end of the reporting period and the date of the financial statements are authorized for issue

    2.Adjusting events are those that

    a.Provide evidence of conditions that existed at the end of the reporting period.

    3.When after the end of reporting period an event occurs that is indicative of conditions that arose
    after the end of reporting period

    d.The entity shall disclose the nature but not the effect of the event.
    4.Financial statements are authorized for issue

    a.When the board of directors reviews and authorizes the financial statements for issue.

    1.Which event after the reporting period would require adjustment?

    Loss on a lawsuit the outcome of which was deemed uncertain at year-end

    2.Events that occur after the current year-end but before the financial statements are issued and
    affect the realizability of accounts receivable should be

    Used to record an adjustment to bad debt expense.

    3.Nonadjusting events include all,except

    Destruction of a major production plant by a fire before the end of the reporting period

    4.Nonadjusting events include all,except

    A mistake in the calculation of allowance for uncollectible accounts receivable.

    5.Which event after the end of reporting period would generally require disclosure?

    Issue of a large amount of ordinary shares

    1.At the end of the current reporting period, an entity carried a receivables from a major customer
    who declared bankruptcy after the end of the reporting period and before the issuance of financial
    statements.Whatshould be reported at the current year-end?

    Make a provision for the event after the reporting period in the financial statements.

    2.An entity decided to build and operate an amusement park next year. The entity applied for a letter
    of guarantee which was issued before the issuance of the financial statements of the current year.
    What is the adjustment required at the current year-end?

    Do nothing
    3. An entity built a new factory building during the current year. Subsequent to the current year-end
    and before issuance of financial statements, the building was destroyed by fire and the claim against
    the insurance entity proved futile because the cause of the fire was negligence on the part of the
    caretaker of the building. What should be reported at the current year-end?

    Disclose the nonadjusting event in the notes to financial statements

    4.An entity deals extensively with foreign currency transactions.Subsequent to the end of reporting
    period and before the date of authorization of the issuance of the financial statements,there were

    Disclose the post-reporting period event

    5. Which statement is true in relation to events after reporting period?

    Notes to the financial statements should give details of material nonadjusting events which could
    influence the economic decisions of users.

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