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Non-adjusting events
Non-adjusting events provide information about conditions
that have arisen since the balance sheet date [IAS10R.3(b)].
The information that such events provide shall be
reflected in the financial statements through disclosure.
No adjustments to the amounts in the financial statements
shall be made [IAS10R.10] .
A common example of a non-adjusting subsequent
event is the proposal or declaration of equity dividends
after the year-end. No provision shall be made for
the dividends in the financial statements because
at the balance sheet date management was not committed
to make the dividend payment . Any provision
would not, therefore, meet the definition of a liability
[IAS10R.13].
Subsequent events affecting the going concern concept
An entity's financial statements shall not be prepared
on the going concern basis if management either
intends to liquidate the entity or to cease trading,
or has no realistic alternative but to do so . Subsequent
events that identify that the going concern concept
is inappropriate shall lead to the preparation of
the financial statements on an alternative basis
[IAS10R.14].
The distinction between adjusting and non-adjusting
events is not relevant in determining whether or
not the going concern basis is appropriate .
Disclosures
Adjusting subsequent events will lead to adjustments
to the amounts and disclosures in the financial
statements. Additional disclosure of the event itself
shall also be made if this is necessary for a proper
understanding of the financial statements.
Disclosure shall be made of non-adjusting events
where this is necessary for a proper understanding
of the financial statements. The disclosures that
shall be given are [IAS10R.21]:
| a) |
nature of the event; and |
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| b) |
an estimate of its financial effect, or
a statement that such an estimate is not possible. |
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