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Recognition and
Measurement
Adjusting Events
after the Balance Sheet Date
8. An entity shall
adjust the amounts recognised in its financial statements
to reflect adjusting events after the balance sheet date.
9. The following are
examples of adjusting events after the balance sheet date that
require an entity to adjust the amounts recognised in its
financial statements, or to recognise items that were not
previously recognised:
(a) the settlement
after the balance sheet date of a court case that confirms
that the entity had a present obligation at the balance sheet
date. The entity adjusts any previously recognised provision
related to this court case in accordance with IAS 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 paragraph 16 of IAS 37.
(b) the receipt of
information after the balance sheet date indicating that an
asset was impaired at the balance sheet date, or that the
amount of a previously recognised impairment loss for that
asset needs to be adjusted. For example:
(i) the bankruptcy
of a customer that occurs after the balance sheet date
usually confirms that a loss existed at the balance sheet
date on a trade receivable and that the entity needs to
adjust the carrying amount of the trade receivable; and
(ii) the sale of
inventories after the balance sheet date may give evidence
about their net realisable value at the balance sheet date.
(c) the
determination after the balance sheet date of the cost of
assets purchased, or the proceeds from assets sold, before the
balance sheet date.
(d) the
determination after the balance sheet date of the amount of
profit-sharing or bonus payments, if the entity had a present
legal or constructive obligation at the balance sheet date to
make such payments as a result of events before that date (see
IAS 19 Employee Benefits).
(e) the discovery of
fraud or errors that show that the financial statements are
incorrect.
Non-adjusting Events
after the Balance Sheet Date
10. An entity shall
not adjust the amounts recognised in its financial statements
to reflect non-adjusting events after the balance sheet
date.
11. An example of a
non-adjusting event after the balance sheet date is a decline
in market value of investments between the balance sheet date
and the date when the financial statements are authorised for
issue. The decline in market value does not normally relate to
the condition of the investments at the balance sheet date,
but reflects circumstances that have arisen subsequently.
Therefore, an entity does not adjust the amounts recognised in
its financial statements for the investments. Similarly, the
entity does not update the amounts disclosed for the
investments as at the balance sheet date, although it may need
to give additional disclosure under paragraph 21.
Dividends
12. If an entity
declares dividends to holders of equity instruments (as
defined in IAS 32 Financial Instruments: Disclosure
and Presentation) after the balance sheet date, the
entity shall not recognise those dividends as a
liability at the balance sheet date.
13. If dividends are
declared (ie the dividends are appropriately authorised and no
longer at the discretion of the entity) after the balance
sheet date but before the financial statements are authorised
for issue, the dividends are not recognised as a liability at
the balance sheet date because they do not meet the criteria
of a present obligation in IAS 37. Such dividends are
disclosed in the notes to the financial statements in
accordance with IAS 1 Presentation of Financial Statements.
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