What are the Accounting Treatment and give examples of Non-Adjusting Events After The Balance Sheet Date

February 28th, 2010 Comments off
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(a)    For non-adjusting events, no adjustments are made to the amounts recognized in the financial statements. However the following disclosure should be provided namely (i) nature of the event  and (ii) estimate of the financial effect , or a statement that such an estimate cannot be made. Note that non-disclosure could affect the ability of the users to make proper evaluations and decisions taken on the basis of the financial statements.

(b)   Some examples of Non –Adjusting Events After The Balance Sheet Date are:

  • Announcing a plan to discontinue an operation.
  • Announcing or commencing the implementation of, a major restructing
  • Major purchase and disposals of assets
  • Expropriation of major assets by government.
  • Commencing major litigation arising solely out of events that occurred after the balance sheet date
  • Entering into significant commitments or contingent liabilities, like issuing significant guarantees
  • Destruction of a major production plant by a fire after the balance date
  • Major ordinary share transactions and potential ordinary share transactions after the balance sheet date
  • Abnormally large changes after the balance sheet date in asset prices or foreign exchange rates
  • Changes in tax rates or tax laws enacted or announced after the balance sheet date that have a significant effect on current and deferred tax assets and liabilities.

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