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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IAS 10 guides about:
Adjusting events means:
Non adjusting events means:
IAS 10 identifies the period covered by these events as starting immediately after the year end, and ending at the date of:
On 29 January 2007, management of an undertaking completes draft financial statements for the year to 31 December 2006. On 4 February 2007, the board of directors reviews the financial statements and approves them for issue. On 15 February 2007, the undertaking announces its profit and selected other financial information. On 18 March 2007, The financial statements are made available to shareholders, and others. On 25 April 2007, the shareholders approve the financial statements at the annual meeting. On 29 April 2007, the approved financial statements are then filed with a regulatory body. Which of the above dates marks the end of the period covered by IAS 10?
If there is a public announcement of profit, or other information......:
There is a settlement, after the end of reporting period, of a court case that confirms that the undertaking had a present obligation, at the year end. You need to:
There is receipt of information, after the year end indicating that an asset was impaired at the year end. You need to:
There is receipt of information, after the year end indicating that the amount of a previously-recorded impairment loss for that asset needs to be adjusted. You need to:
You learn of the bankruptcy of a customer that occurs after the year end. You need to:
You learn of the determination after the year end of the cost of assets purchased. You need to:
You learn of a change to the proceeds from assets sold, before the year end. You need to:
You receive the calculation of the amount of profit-sharing payments, relating to the period of the financial statements, after the year end. You need to:
You are informed of a fraud, that shows that financial statements, that you are about to approve to be incorrect. You need to:
You learn of a decline in market value of investments, between the year end, and the date when the financial statements are approved for issue. You need to:
Your company declares a dividend, between the year end, and the date when the financial statements are approved for issue. You need to: