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IAS 10 EVENTS AFTER BALANCE SHEET DATE MCQs with Answers
IAS 10 EVENTS AFTER THE BALANCE SHEET DATE
BACKGROUND AND INTRODUCTION:
The balance sheet date is the pivotal date at which the financial position of an entity is determined and reported. Thus, events that occur up to that date are critical in arriving at an entity’s financial results and financial position. However, sometimes events occurring after the balance sheet date may provide additional information about events that occurred before and up to the balance sheet date. This information may have an impact on the financial results and the financial position of the entity. It is imperative that those post–balance sheet events up to a certain “cutoff date” (discussed later and referred to as the authorization date) be taken into account in preparing the financial statements for the year ended and as at the balance sheet.
Additionally, certain events that occur after the balance sheet date might not affect the figures reported in the financial statements but may warrant disclosure in footnotes to the financial statements. Informing users of financial statements about such post–balance sheet date events through footnote disclosures helps them make informed decisions with respect to the entity, keeping in mind the impact these post–balance sheet events may have on the financial position of the entity as at the balance sheet date.
SCOPE of IAS 10:
IAS 10, Events After the Balance Sheet Date, provides guidance on accounting and disclosure of post–balance sheet events. For the purposes of this Standard, post–balance sheet events are categorized into “adjusting” and “nonadjusting” events. The issue addressed by the Standard, IAS 10, is to what extent anything that happens during the period when the financial statements are being prepared should be reflected in those financial statements. The Standard distinguishes between events that provide information about the state of the entity at the balance sheet date and those that concern the next financial period. A secondary issue is the cutoff point beyond which the financial statements are considered to be finalized.
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