Which of the following are considered 'adjusting events' under IAS 10 Events after the Reporting Period? (Select all that apply)

Answer options:

Bankruptcy of a major customer shortly after year-end, relating to a debt owed at year-end

Destruction of a major factory by fire after year-end

Discovery of a fraud that shows the financial statements are incorrect

Announcement of a major restructuring plan after year-end

How to approach this question

Ask yourself: Did the condition exist at the reporting date? If yes, it's adjusting.

Full Answer

Adjusting events provide evidence of conditions that existed at the end of the reporting period. A customer going bankrupt confirms a receivable was bad at year-end. Discovery of fraud confirms the year-end figures were wrong. Fires and restructuring announcements relate to conditions arising after the reporting period.

Common mistakes

Thinking a major disaster like a fire must be adjusted because of its size (it is only disclosed).

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