This chapter explains what can happen between the reporting date and the date the financial statements are authorized for issue. It shows you how to identify adjusting and non-adjusting events, and how each type is recognized or disclosed to support accurate, transparent, IFRS-compliant financial reporting.

Learning objective

By the end of this chapter, you should be able to:

Define an event after the reporting period in accordance with IFRS Accounting Standards.
Classify events as adjusting or non-adjusting.
Distinguish between how adjusting and non-adjusting events are reported in the financial statements.

Definitions

Event after the reporting period: It is defined under IAS 10 as “those events, both favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.”

End of reporting period: The last day of the financial year (e.g., December 31, 2024)
Authorization date: The date the board of directors approves the financial statements for issue

Any events occurring within this window are considered “events after the reporting period.”

Classification of events

Events after the reporting period fall into two categories:

Adjusting events
Non-adjusting events

Definitions

Adjusting Events: These are events that provide evidence of conditions that existed at the reporting date. In other words, they confirm or clarify what was already true at year-end. Examples:

Settlement of a court case that confirms a liability existed at year-end
Discovery of fraud or errors showing that the financial statements were incorrect
Bankruptcy of a customer, confirming that the receivable was impaired at year-end
Determination of the sale price of assets sold before year-end

Definitions

Non-adjusting Events: These are events that indicate conditions that arose after the reporting date. They reflect new circumstances that didn’t exist at year-end. Examples:

Major business combinations or disposals after year-end
Announcement of plans to discontinue operations
Destruction of assets by fire or flood after year-end
Decline in market value of investments after year-end
Issue of shares or debt securities after year-end

Reporting treatment

Adjusting Events

Financial statements MUST be adjusted to reflect these events.

Adjust the amounts recognized in the financial statements to reflect the new information.
These adjustments ensure the financial statements present the financial position as of the reporting date.
No disclosure is typically required because the amounts are updated directly in the statements.

Non-adjusting Events

Financial statements are NOT adjusted. However, if a non-adjusting event is material, it must be disclosed in the notes. Disclosure includes:

The nature of the event
An estimate of the financial effect (or a statement that such an estimate cannot be made)

This disclosure helps users understand significant developments after year-end and avoids misleading conclusions about the entity’s financial position.

Special case - Going Concern: If events after the reporting period indicate that the going concern assumption is no longer appropriate, this is an adjusting event requiring fundamental changes to the basis of preparation of the financial statements.

Illustration: Identifying, adjusting, and non-adjusting events

Tamako Ltd has a December 31, 2024, year-end. The financial statements were authorized for issue by the board of directors on March 15, 2025.

The following events occurred between January 1, 2025, and March 15, 2025. For each event: indicate whether it is an adjusting or non-adjusting event and explain your reasons. Indicate the implication (treatment) on the financial statements.

Event 1: On January 20, 2025, a major customer, XYZ Co, declared bankruptcy. XYZ Co owed Tamako Ltd $120,000 at December 31, 2024. Investigations revealed that XYZ Co had been experiencing severe financial difficulties throughout the last quarter of 2024.Do you know the answer?

(spoiler)

It is an Adjusting event.
It is so because the bankruptcy provides evidence that the receivable was impaired at December 31, 2024, as XYZ Co was experiencing financial difficulties in the last quarter of 2024. The condition existed at year-end.
The financial statement will be adjusted by writing-off the $120,000 receivable and recognizing bad debt expense in the 2024 financial statements.

Event 2: On February 5, 2025, ABC Ltd’s main warehouse was destroyed by a flood. The warehouse had a carrying amount of $800,000 at December 31, 2024, and was insured for $600,000. The flood was caused by unprecedented rainfall in February 2025.Do you know the answer?

(spoiler)

It is a non-adjusting event.
Reason: The flood occurred in February 2025 due to unprecedented rainfall. This is a new condition that arose after year-end; the warehouse was intact as of December 31, 2024.
Treatment: No adjustment to financial statements. Disclose the event, describing the flood, estimated loss of $200,000 ($800,000 - $600,000 insurance), and impact on operations.

Event 3: On February 28, 2025, a court case was settled. ABC Ltd had been sued by a supplier for breach of contract. The lawsuit was filed in November 2024, and ABC Ltd’s lawyers had advised that a loss was probable and estimated at $150,000. The court ordered ABC Ltd to pay $180,000. ABC Ltd had recognized a provision of $150,000 at December 31, 2024.Do you know the answer?

(spoiler)

It is an adjusting event.
Reason: The court case confirms a liability that existed as of December 31, 2024. The lawsuit was filed in November 2024, providing evidence about the obligation’s amount at year-end.
Treatment: Adjust the provision from $150,000 to $180,000, recognizing an additional $30,000 expense in the 2024 financial statements.

Event 4: On March 10, 2025, ABC Ltd announced a major restructuring plan that will result in 100 employees being made redundant. The plan was developed and announced entirely in March 2025. The estimated cost of redundancy payments is $500,000.Do you know the answer?

(spoiler)

It is a non-adjusting event.
Reason: The restructuring plan was developed and announced entirely in March 2025. No obligation or condition existed as of December 31, 2024. This represents a new management decision after year-end.
Treatment: No adjustment to financial statements. Disclose the restructuring plan, estimated redundancy costs of $500,000, and expected impact on future operations.

Next | 7.5 Disclosure-notes

Events after the reporting period

Learning objective

By the end of this chapter, you should be able to:

Define an event after the reporting period in accordance with IFRS Accounting Standards.
Classify events as adjusting or non-adjusting.
Distinguish between how adjusting and non-adjusting events are reported in the financial statements.

Definitions

Event after the reporting period: It is defined under IAS 10 as “those events, both favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.”

End of reporting period: The last day of the financial year (e.g., December 31, 2024)
Authorization date: The date the board of directors approves the financial statements for issue

Any events occurring within this window are considered “events after the reporting period.”

Classification of events

Events after the reporting period fall into two categories:

Adjusting events
Non-adjusting events

Definitions

Adjusting Events: These are events that provide evidence of conditions that existed at the reporting date. In other words, they confirm or clarify what was already true at year-end. Examples:

Settlement of a court case that confirms a liability existed at year-end
Discovery of fraud or errors showing that the financial statements were incorrect
Bankruptcy of a customer, confirming that the receivable was impaired at year-end
Determination of the sale price of assets sold before year-end

Definitions

Non-adjusting Events: These are events that indicate conditions that arose after the reporting date. They reflect new circumstances that didn’t exist at year-end. Examples:

Major business combinations or disposals after year-end
Announcement of plans to discontinue operations
Destruction of assets by fire or flood after year-end
Decline in market value of investments after year-end
Issue of shares or debt securities after year-end

Reporting treatment

Adjusting Events

Financial statements MUST be adjusted to reflect these events.

Adjust the amounts recognized in the financial statements to reflect the new information.
These adjustments ensure the financial statements present the financial position as of the reporting date.
No disclosure is typically required because the amounts are updated directly in the statements.

Non-adjusting Events

Financial statements are NOT adjusted. However, if a non-adjusting event is material, it must be disclosed in the notes. Disclosure includes:

The nature of the event
An estimate of the financial effect (or a statement that such an estimate cannot be made)

This disclosure helps users understand significant developments after year-end and avoids misleading conclusions about the entity’s financial position.

Special case - Going Concern: If events after the reporting period indicate that the going concern assumption is no longer appropriate, this is an adjusting event requiring fundamental changes to the basis of preparation of the financial statements.

Illustration: Identifying, adjusting, and non-adjusting events

Tamako Ltd has a December 31, 2024, year-end. The financial statements were authorized for issue by the board of directors on March 15, 2025.

(spoiler)

It is an Adjusting event.
It is so because the bankruptcy provides evidence that the receivable was impaired at December 31, 2024, as XYZ Co was experiencing financial difficulties in the last quarter of 2024. The condition existed at year-end.
The financial statement will be adjusted by writing-off the $120,000 receivable and recognizing bad debt expense in the 2024 financial statements.

(spoiler)

It is a non-adjusting event.
Reason: The flood occurred in February 2025 due to unprecedented rainfall. This is a new condition that arose after year-end; the warehouse was intact as of December 31, 2024.
Treatment: No adjustment to financial statements. Disclose the event, describing the flood, estimated loss of $200,000 ($800,000 - $600,000 insurance), and impact on operations.

(spoiler)

It is an adjusting event.
Reason: The court case confirms a liability that existed as of December 31, 2024. The lawsuit was filed in November 2024, providing evidence about the obligation’s amount at year-end.
Treatment: Adjust the provision from $150,000 to $180,000, recognizing an additional $30,000 expense in the 2024 financial statements.

(spoiler)

It is a non-adjusting event.
Reason: The restructuring plan was developed and announced entirely in March 2025. No obligation or condition existed as of December 31, 2024. This represents a new management decision after year-end.
Treatment: No adjustment to financial statements. Disclose the restructuring plan, estimated redundancy costs of $500,000, and expected impact on future operations.

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7. Preparing financial statements

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Events after the reporting period

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Learning objective

By the end of this chapter, you should be able to:

Define an event after the reporting period in accordance with IFRS Accounting Standards.
Classify events as adjusting or non-adjusting.
Distinguish between how adjusting and non-adjusting events are reported in the financial statements.

Definitions

Event after the reporting period: It is defined under IAS 10 as “those events, both favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.”

End of reporting period: The last day of the financial year (e.g., December 31, 2024)
Authorization date: The date the board of directors approves the financial statements for issue

Any events occurring within this window are considered “events after the reporting period.”

Classification of events

Events after the reporting period fall into two categories:

Adjusting events
Non-adjusting events

Definitions

Adjusting Events: These are events that provide evidence of conditions that existed at the reporting date. In other words, they confirm or clarify what was already true at year-end. Examples:

Settlement of a court case that confirms a liability existed at year-end
Discovery of fraud or errors showing that the financial statements were incorrect
Bankruptcy of a customer, confirming that the receivable was impaired at year-end
Determination of the sale price of assets sold before year-end

Definitions

Non-adjusting Events: These are events that indicate conditions that arose after the reporting date. They reflect new circumstances that didn’t exist at year-end. Examples:

Major business combinations or disposals after year-end
Announcement of plans to discontinue operations
Destruction of assets by fire or flood after year-end
Decline in market value of investments after year-end
Issue of shares or debt securities after year-end

Reporting treatment

Adjusting Events

Financial statements MUST be adjusted to reflect these events.

Adjust the amounts recognized in the financial statements to reflect the new information.
These adjustments ensure the financial statements present the financial position as of the reporting date.
No disclosure is typically required because the amounts are updated directly in the statements.

Non-adjusting Events

Financial statements are NOT adjusted. However, if a non-adjusting event is material, it must be disclosed in the notes. Disclosure includes:

The nature of the event
An estimate of the financial effect (or a statement that such an estimate cannot be made)

This disclosure helps users understand significant developments after year-end and avoids misleading conclusions about the entity’s financial position.

Special case - Going Concern: If events after the reporting period indicate that the going concern assumption is no longer appropriate, this is an adjusting event requiring fundamental changes to the basis of preparation of the financial statements.

Illustration: Identifying, adjusting, and non-adjusting events

Tamako Ltd has a December 31, 2024, year-end. The financial statements were authorized for issue by the board of directors on March 15, 2025.

(spoiler)

It is an Adjusting event.
It is so because the bankruptcy provides evidence that the receivable was impaired at December 31, 2024, as XYZ Co was experiencing financial difficulties in the last quarter of 2024. The condition existed at year-end.
The financial statement will be adjusted by writing-off the $120,000 receivable and recognizing bad debt expense in the 2024 financial statements.

(spoiler)

It is a non-adjusting event.
Reason: The flood occurred in February 2025 due to unprecedented rainfall. This is a new condition that arose after year-end; the warehouse was intact as of December 31, 2024.
Treatment: No adjustment to financial statements. Disclose the event, describing the flood, estimated loss of $200,000 ($800,000 - $600,000 insurance), and impact on operations.

(spoiler)

It is an adjusting event.
Reason: The court case confirms a liability that existed as of December 31, 2024. The lawsuit was filed in November 2024, providing evidence about the obligation’s amount at year-end.
Treatment: Adjust the provision from $150,000 to $180,000, recognizing an additional $30,000 expense in the 2024 financial statements.

(spoiler)

It is a non-adjusting event.
Reason: The restructuring plan was developed and announced entirely in March 2025. No obligation or condition existed as of December 31, 2024. This represents a new management decision after year-end.
Treatment: No adjustment to financial statements. Disclose the restructuring plan, estimated redundancy costs of $500,000, and expected impact on future operations.

Next | 7.5 Disclosure-notes

Events after the reporting period

Learning objective

By the end of this chapter, you should be able to:

Define an event after the reporting period in accordance with IFRS Accounting Standards.
Classify events as adjusting or non-adjusting.
Distinguish between how adjusting and non-adjusting events are reported in the financial statements.

Definitions

Event after the reporting period: It is defined under IAS 10 as “those events, both favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.”

End of reporting period: The last day of the financial year (e.g., December 31, 2024)
Authorization date: The date the board of directors approves the financial statements for issue

Any events occurring within this window are considered “events after the reporting period.”

Classification of events

Events after the reporting period fall into two categories:

Adjusting events
Non-adjusting events

Definitions

Adjusting Events: These are events that provide evidence of conditions that existed at the reporting date. In other words, they confirm or clarify what was already true at year-end. Examples:

Settlement of a court case that confirms a liability existed at year-end
Discovery of fraud or errors showing that the financial statements were incorrect
Bankruptcy of a customer, confirming that the receivable was impaired at year-end
Determination of the sale price of assets sold before year-end

Definitions

Non-adjusting Events: These are events that indicate conditions that arose after the reporting date. They reflect new circumstances that didn’t exist at year-end. Examples:

Major business combinations or disposals after year-end
Announcement of plans to discontinue operations
Destruction of assets by fire or flood after year-end
Decline in market value of investments after year-end
Issue of shares or debt securities after year-end

Reporting treatment

Adjusting Events

Financial statements MUST be adjusted to reflect these events.

Adjust the amounts recognized in the financial statements to reflect the new information.
These adjustments ensure the financial statements present the financial position as of the reporting date.
No disclosure is typically required because the amounts are updated directly in the statements.

Non-adjusting Events

Financial statements are NOT adjusted. However, if a non-adjusting event is material, it must be disclosed in the notes. Disclosure includes:

The nature of the event
An estimate of the financial effect (or a statement that such an estimate cannot be made)

This disclosure helps users understand significant developments after year-end and avoids misleading conclusions about the entity’s financial position.

Special case - Going Concern: If events after the reporting period indicate that the going concern assumption is no longer appropriate, this is an adjusting event requiring fundamental changes to the basis of preparation of the financial statements.

Illustration: Identifying, adjusting, and non-adjusting events

Tamako Ltd has a December 31, 2024, year-end. The financial statements were authorized for issue by the board of directors on March 15, 2025.

(spoiler)

It is an Adjusting event.
It is so because the bankruptcy provides evidence that the receivable was impaired at December 31, 2024, as XYZ Co was experiencing financial difficulties in the last quarter of 2024. The condition existed at year-end.
The financial statement will be adjusted by writing-off the $120,000 receivable and recognizing bad debt expense in the 2024 financial statements.

(spoiler)

It is a non-adjusting event.
Reason: The flood occurred in February 2025 due to unprecedented rainfall. This is a new condition that arose after year-end; the warehouse was intact as of December 31, 2024.
Treatment: No adjustment to financial statements. Disclose the event, describing the flood, estimated loss of $200,000 ($800,000 - $600,000 insurance), and impact on operations.

(spoiler)

It is an adjusting event.
Reason: The court case confirms a liability that existed as of December 31, 2024. The lawsuit was filed in November 2024, providing evidence about the obligation’s amount at year-end.
Treatment: Adjust the provision from $150,000 to $180,000, recognizing an additional $30,000 expense in the 2024 financial statements.

(spoiler)

It is a non-adjusting event.
Reason: The restructuring plan was developed and announced entirely in March 2025. No obligation or condition existed as of December 31, 2024. This represents a new management decision after year-end.
Treatment: No adjustment to financial statements. Disclose the restructuring plan, estimated redundancy costs of $500,000, and expected impact on future operations.