📖 Overview
This standard addresses events that occur between the balance sheet date and the date financial statements are authorized for issue. Events are classified into: adjusting events (requiring adjustment of financial statements) and non-adjusting events (requiring disclosure only if material).
🎯 Scope
This standard applies to the accounting treatment and disclosure of events that occur between the end of the reporting period (balance sheet date) and the date financial statements are authorized for issue.
⚙️ Key Principles
**Two Types of Events:**
1. **Adjusting Events**: Events that provide evidence of conditions that existed at the end of the reporting period.
- **Example**: Settlement of a court case confirming a liability existed at the balance sheet date.
2. **Non-Adjusting Events**: Events that indicate conditions that arose after the end of the reporting period.
- **Example**: Fire or flood after the balance sheet date, changes in asset prices, dividend declarations.
📏 Measurement
**Adjusting Events:** Financial statements are adjusted to reflect the effect.
**Non-Adjusting Events:** Financial statements are not adjusted, but disclosure is made if material.
**Dividends:** If dividends are declared after the reporting period, they are not recognized as a liability at the balance sheet date, but are disclosed in the notes.
✅ Recognition
Adjusting events are recognized in the financial statements for the ended period.
Non-adjusting events are not recognized in the financial statements, but are disclosed.
An entity does not prepare financial statements on a going concern basis if post-reporting period events indicate this assumption is inappropriate.
📊 Presentation
**Adjusting Events:** Their effects appear in the financial statement balances.
**Non-Adjusting Events:** Disclosed in the notes, explaining:
- Nature of the event.
- Estimate of the financial effect (or statement that estimation is impossible).
**Date of Authorization:** The date when the financial statements were authorized for issue and who authorized them must be disclosed.
📝 Disclosure Requirements
Disclosures required:
- Date financial statements were authorized for issue.
- Who authorized the financial statements.
- Nature and effect of any material non-adjusting events.
- If the entity cannot estimate the effect, this must be stated.
- Any doubts about the going concern assumption.
🔗 Related Standards
IAS 1 (Presentation of Financial Statements), IFRS 5 (Non-current Assets Held for Sale)