Events after the reporting period

IAS 10 deals with events — favourable and unfavourable — that happen between the end of the reporting period and the date the financial statements are authorised for issue (usually board approval; later shareholder approval doesn't extend the window). The entity must disclose that date and who gave the authorisation.

Adjusting events give evidence of conditions that existed at the reporting date. The amounts recognised are adjusted. Examples: - a court case settled after year end that confirms a present obligation existed at year end; - a customer's bankruptcy after year end, which usually shows the receivable was already impaired; - inventory sold after year end below cost, giving evidence of its net realisable value; - determining after year end the cost of an asset bought, or proceeds of an asset sold, before year end; - finalising bonuses or profit-sharing when an obligation existed at year end; - discovering fraud or errors showing the statements are incorrect.

Non-adjusting events reflect conditions that arose after the reporting date. Amounts are not adjusted, but material ones are disclosed (nature and an estimate of the financial effect, or a statement that it can't be estimated). Examples: a fall in market value of investments after year end; a fire or flood; a major acquisition or disposal; announcing a restructuring; share issues; changes in tax rates enacted after year end.

Dividends declared after the reporting date are not a liability at the reporting date — there was no obligation then. They are disclosed in the notes.

Going concern overrides everything: if after the reporting date management decides to liquidate or stop trading, or has no realistic alternative, the statements must not be prepared on a going concern basis (IAS 10.14).