Adjusting Events - Ind AS - Indian Accounting Standards - Companies Law

Adjusting Events Adjusting events after the reporting period - Adjusting events are the events that existed at the time of Balance Sheet date. An entity shall adjust the amounts recognised in its financial statements to reflect adjusting events after the reporting period. The following are examples of adjusting events after the reporting period that require an entity to adjust the amounts recognised in its financial statements, or to recognise items that were not previously recognised: the settlement after the reporting period of a court case that confirms that the entity had a present obligation at the end of the reporting period. The entity adjusts any previously recognised provision related to this court case in accordance with Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets or recognises a new provision. The entity does not merely disclose a contingent liability because the settlement provides additional evidence that would be considered in accordance with Ind AS 37. the receipt of information after the reporting period indicating that an asset was impaired at the end of the reporting period, or that the amount of a previously recognised impairment loss for that asset needs to be adjusted. For example: the bankruptcy of a customer that occurs after the reporting period usually confirms that the customer was credit-impaired at the end of the reporting period; and the sale of inventories after the reporting period may give evidence about their net realisable value at the end of the reporting period. the determination after the reporting period of the cost of assets purchased, or the proceeds from assets sold, before the end of the reporting period. the determination after the reporting period of the amount of profit-sharing or bonus payments, if the entity had a present legal or constructive obligation at the end of the reporting period to make such payments as a result of events before that date (see Ind AS 19, Employee Benefits). the discovery of fraud or errors that show that the financial statements are incorrect. Treatment If the subsequent event is an adjusting event, the entity should record the transaction as on balance sheet date. Entity should consider all such adjusting events till the date of approval of financial statements by the approving authority in the preparation of the financial statements.