The following are extract of events that happen to a company, you are requird to identify whether to would require the company to make an adjusting as per IAS 10 or not, with a proper justification

1.On 1 February 20X1 an entity's financial statements for the year ended 31 December 20X0 were authorised for issue.

On 1 January 20X1 a competitor settled a claim by the entity for breach of one of its patents by paying the entity CU600,000. The entity opened a case against a competitor in 20X0. However, until February2011 the competitor disputed the entity's case.

ANSWER:

The settlement of the case provides evidence of conditions that existed at the end of the reporting period (see paragraph 32.2(a)). The entity must report a CU600,000 receivable at 31 December 20X0 with a corresponding increase in profit for the year ended

31 December 20X0

In addition,

On 1 February 20X1 a competitor agreed to settle a claim by the entity for breach of one of its patents. The entity opened the case against the competitor in 20X0. However, the competitor had disputed the entity's case.

The eventsettlement of the caseis an adjusting event after the end of the reporting period. It provides conclusive evidence that the entity had a valid receivable from the competitor at 31 December 20X0 from which economic benefits will flow to the entity

2.In February 2015 the entity discovers that an error was made in the inventory reported in its statement of financial position at 31 December 2012, resulting in an overstatement of income for that year. No error was made in the inventory that was reported for 31 December 2013. Therefore the effect of the error on profit for 2012 was 'reversed' in measuring profit for 2013.

ANSWER:

If historical data are presented that include 20X2 and 20X3, these years should be restated even though there is no effect in 20X4 or 20X5, not even on retained earnings at 1 January 20X4. This is a correction of an error

3.On 1 February 2011 an entity's financial statements for the year ended 31 December 2010 were authorised for issue. At 31 December 2010 the entity had significant foreign currency exposures. By 1 February 2011 a significant loss had been incurred on these exposures because of a material weakening of the entity's functional currency against the foreign currencies to which it is exposed.

ANSWER:

The deterioration of the exchange rate is a non-adjusting event after the end of the reporting period. It is indicative of conditions that arose after the end of the reporting period (see paragraph 32.2(b)). The decline in exchange rate does not usually relate to conditions that existed at the end of the reporting period, but reflects circumstances that have arisen subsequently (ie the exchange rate at the end of the reporting periodtook account of conditions that existed at that date). Therefore, the entity does not adjust the amounts recognised during the year for the change in the exchange rate. Similarly, the entity does not update the amounts disclosed for the foreign currency denominated liabilities (and assets) as at the end of the reporting period,