100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Summary IAS 10 Events after reporting period $0.00

Summary

Summary IAS 10 Events after reporting period

 83 views  9 purchases
  • Course
  • Institution

Summary of IAS 10 for third year BAcc course

Preview 2 out of 8  pages

  • August 26, 2020
  • 8
  • 2019/2020
  • Summary
avatar-seller
IAS 10: EVENTS AFTER THE REPORTING PERIOD
IAS 10


→ Events between year-end and the financials being authorised (directors sign off on AFS)
→ Issue: Do financials need to be adjusted?

DEFINITIONS (.03-.07):
− Types:
o [1] Adjusting
▪ Adjust the AFS
▪ E.g. Debtor at year-end (SFP balance due), but at year end you knew he was expiring
financial difficulties – thus you recognised an allowance for credit looses for that debtor. But
after year-end you received the information that the debtor became insolvent, liquidated and
you will not receive your money. Thus will adjust AFS and write off the debt to bad debts
o [2] Non-Adjusting
▪ Don’t adjust the AFS
▪ E.g. debtor in SFP, after year end we were informed that their store burnt down and thus
they will not be able to pay (cash flow problems). But you did not know about the event at
all, it arouse completed after the reporting period.

RECOGNITION AND MEASUREMENT (.08-.11)
− Note: If a non-adjusting event after reporting date is material = disclosed in a note (.21)

DIVIDENDS (.12-.13):
− Do not comply to IAS 37 requirement of “current obligation on reporting date” if div’s are declared after
reporting date
− IAS 1 requirements for proposed or declared dividends after YE before authorisation: (.137) Amount and the
dividend per share
o (.107) If provide for before year end, in SCE & NOTE: amount and div per share

Example:
Note to AFS for the year ended 31 December 2011
The dividends paid in 2011 and 2010 were R10 000 (48c per share) and R15 000 (78 c per share) respectively. A
dividend in respect of 2011 of 51c per share, amounting to a total dividend of R13 000, is to be proposed at the Annual
General Meeting on 30 April 2012. These financial statements do not reflect this dividend payable.

GOING CONCERN: (.14-.16)
− Assume entity will continue to operate in foreseeable future
− .14: Rather account on the liquidation basis

DISCLSOURE: (.17-.22)
− .17: Usually directors give authorisation

Example: “These financial statements have been approved for issue by the Board of Directors on xxxx”




1

, QUESTION 1

Marlyn Ltd. is a listed company which operates in the fishing industry, catching and processing fish. The
financial statements for the year ended 30 September 2011 were presented to the board of directors on 20
December 2011 for final authorisation. NB: Not issue date; rather about date of approval.

The following events occurred after the reporting date. Accept that no transactions for events were recorded
at year-end.

1. During November 2011, After Y/E just after commencement of the crayfish season, red tide poisoned
crayfish on the entire west coast. This negatively affected the operations of Marlyn Ltd. and it is
estimated that the operating profit will decrease by R360 000 after tax for the year ending
30 September 2012.

Event after year-end and before the financials have been authorised.
Not expected at Y/E and will only effect operations of the next year. No effect on current year.
No additional information for conditions existing at Y/E.
Non-adjusting event.
It is material (given in question) → Note disclosure in Financials for the year ending 30 September
2011.

2. Marlyn Ltd. owns a large property on the coast which was bought 10 years ago for R50 000 and is
shown in the statement of financial position at this value.

On 10 September 2011 Before Y/E Marlyn Ltd. was notified by the municipality that this piece of land
has been expropriated for the purpose of building a new harbour. On
30 November 2011 After Y/E R200 000 was received for the land.

Event after year-end: Receiving money on 30/11/2011.
Adjusting event, as it provides additional evidence concerning conditions existing at year-end.
Thus derecognise land as owner transferred.
Dt Debtors 200 000; Ct Property 50 000; Ct Profit 150 000

Assume a tax rate of 28%. Assume all amounts are material and that the company remains a going concern
regardless of the effect of the abovementioned events on the financial statements.



2

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller stelliesaccounting. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $0.00. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

80796 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
Free  9x  sold
  • (0)