Confusion over a statement

seanog91

hey,

Ok I am having some confusion over this: An adjusting event is one which provided evidence of conditions that existed at the date of the statement of
financial position.
Is the date of statement of financial position the same as the date the financial
statements are issued?

dbran

No

The date of the statement of the financial position is the balances sheet date. The accounts may be issued months later.

Regards

dbran

hivizman

The term "adjusting event" comes from International Accounting Standard 10 "Events after the Reporting Period". The standard deals with events that occur in the period between the end of the reporting period (normally a period of one year ending on a specific date) and the date on which the financial statements for that period are authorised for issue. This gap can be several months long. During the gap, various events may occur that provide evidence of conditions that existed at the end of the reporting period (that is, the balance sheet date, or, in more current terminology, the date of the statement of financial position). These are "adjusting events", so-called because it is necessary to adjust the amounts recognised in the financial statements to reflect the events.

IAS 10 gives various examples of adjusting events. Often, the events provide information on the value of assets and liabilities held at the balance sheet date, which may require the company to recognise an impairment or otherwise write down the carrying amount. In some circumstances, the information may involve precise details of a transaction that took place before the balance sheet date (for example, the exact purchase price for an asset may not be known exactly on the balance sheet date, but may become known only subsequently, when an invoice is received).

However, there are also events after the reporting period that do not lead to adjustments to the amounts recognised in the financial statements because they relate to conditions after the balance sheet date. For example, investments might fall in market value after the balance sheet date, but this decline does not necessarily mean that the investments were incorrectly stated on the balance sheet date. Where these "non-adjusting events" are material, non-disclosure could affect users' decisions, so IAS 10 requires disclosure of such material non-adjusting events.

seanog91

hivizman wrote: »

The term "adjusting event" comes from International Accounting Standard 10 "Events after the Reporting Period". The standard deals with events that occur in the period between the end of the reporting period (normally a period of one year ending on a specific date) and the date on which the financial statements for that period are authorised for issue. This gap can be several months long. During the gap, various events may occur that provide evidence of conditions that existed at the end of the reporting period (that is, the balance sheet date, or, in more current terminology, the date of the statement of financial position). These are "adjusting events", so-called because it is necessary to adjust the amounts recognised in the financial statements to reflect the events.

IAS 10 gives various examples of adjusting events. Often, the events provide information on the value of assets and liabilities held at the balance sheet date, which may require the company to recognise an impairment or otherwise write down the carrying amount. In some circumstances, the information may involve precise details of a transaction that took place before the balance sheet date (for example, the exact purchase price for an asset may not be known exactly on the balance sheet date, but may become known only subsequently, when an invoice is received).

However, there are also events after the reporting period that do not lead to adjustments to the amounts recognised in the financial statements because they relate to conditions after the balance sheet date. For example, investments might fall in market value after the balance sheet date, but this decline does not necessarily mean that the investments were incorrectly stated on the balance sheet date. Where these "non-adjusting events" are material, non-disclosure could affect users' decisions, so IAS 10 requires disclosure of such material non-adjusting events.

Thanks,
I did not need as much detail but I found it very helpful!