IAS 10 : Non-adjusting Events after the Balance Sheet Date

5. Non-adjusting Events after the Balance Sheet Date

Non-adjusting events require notes to the financial statements. The financial figures remain unaltered.

An example of a non-adjusting event after the balance sheet date is a

decline in market value of investments, between the balance sheet and approval date.

The decline in market value does not normally relate to the value of the

investments at the balance sheet date, but reflects circumstances that

have arisen since that time.

EXAMPLE decline in value of investments

Your bank has invested heavily in Far-Eastern stocks that have performed well in the period to 31st December 2XX4. 

On January 14th 2XX5, a series of earthquakes have hit the region, causing major industrial devastation. Stock markets plummet, and remain very depressed until the date of approval of your financial statements.

You do not change the figures in your financial statements to 31st December 2XX4, but note the post-balance-sheet decline of investments, and amounts involved.

Dividends

If a bank declares dividends to shareholders after the balance sheet date, the bank shall not record those dividends as a liability at the balance sheet date.

If dividends are declared after the balance sheet date, but before the financial statements are approved for issue, the dividends are disclosed in the notes to the financial statements.

EXAMPLE dividends

Your bank has prepared its financial statements for the period to 31^st December 2XX4.

On January 24^th 2XX5, your directors declare dividends totaling $7 million.

You do not change the figures in your financial statements to 31^st December 2XX4, but quantify the post-balance-sheet dividends in the note on retained earnings.