Chapter 53: Events After the Reporting Period Flashcards
(14 cards)
What are subsequent events as defined by IFRS?
Events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue.
These events can impact the financial statements and must be assessed for materiality.
What is the ‘authorized for issue’ date?
The date on which the board of directors approves the financial statements.
This date marks the end of the subsequent events period.
What is the subsequent events period?
The interval between the end of the reporting period and when the financial statements are authorized for issue.
Events during this period must be considered for their impact on financial statements.
What is the first step in dealing with a subsequent event?
Assessing the materiality of the event to the users of the financial statements.
This assessment determines the subsequent actions required.
What happens if a subsequent event is not material?
No further work is required.
Non-material events do not need to be recorded or disclosed.
What are the two types of subsequent events?
Adjusting events and non-adjusting events.
Each type has different implications for financial reporting.
Define adjusting events.
Events that provide evidence of conditions that existed at the end of the reporting period.
These must be recorded in the financial statements before they are authorized for release.
Define non-adjusting events.
Material events that are indicative of conditions that arose after the reporting period.
They are disclosed in the notes to the financial statements.
What must be disclosed for each material category of non-adjusting events?
- The nature of the event
- An estimate of its financial effect, or a statement that such an estimate cannot be made.
This disclosure is important for informing users of potential impacts on economic decisions.
What is the primary difference between IFRS and ASPE regarding subsequent events?
The definition of the subsequent event period.
IFRS uses the authorization date, while ASPE uses the completion date of the financial statements.
What is the subsequent event end date according to IFRS?
Authorization date of the financial statements.
This is the cutoff for considering subsequent events in IFRS reporting.
What is the subsequent event end date according to ASPE?
Completion date of the financial statements.
This may differ from IFRS if there is a lag in the board’s authorization.
True or False: Adjusting events must be disclosed in the notes to the financial statements.
False.
Adjusting events must be recorded in the financial statements.
Fill in the blank: Non-adjusting events are not recorded but are instead ______ in the notes to the financial statements.
disclosed
