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Plain‑English explainer of HKAS 10 / IAS 10 for students, junior accountants and non‑specialists who find official standards too dense to read.
This article is based on Hong Kong Accounting Standards (HKAS / HKFRS), which are fully aligned with IAS / IFRS except for minor local tweaks, so the same principles generally apply under IAS / IFRS unless noted otherwise. The goal is to unpack HKAS 10 Events after the Reporting Period (equivalent to IAS 10) using plain English and practical, real‑life examples instead of technical jargon. It is written for students, junior accountants, audit juniors and finance professionals who want to understand not just “what the standard says” but how to actually read and prepare financial statements in line with it.
When you see “the company” or “the entity” below, you can think of any entity that prepares general purpose financial statements under HKFRS / IFRS.
When “Events After The Reporting Period” Do Not Show Up Alone
In simple textbook questions, events after the reporting period usually appear one at a time: a customer goes bankrupt, a fire destroys inventory, a dividend is declared, and so on. But in listed‑company annual reports, advanced exam questions or real‑life audits, what you see much more often is this:
- A lawsuit is settled after year‑end, which involves HKAS 37 Provisions and contingent liabilities and at the same time HKAS 10’s adjusting vs non‑adjusting judgment.
- Bad news after year‑end raises questions not only under HKAS 10 (adjusting vs non‑adjusting) but also under HKAS 1 for going‑concern disclosures, and sometimes HKAS 12 for deferred tax.
- A post‑year‑end acquisition or disposal forces you to separate which part is only an HKAS 10 disclosure, and which parts must be handled under HKFRS 3 Business Combinations or HKFRS 5 Non‑current Assets Held for Sale and Discontinued Operations.
This article’s aim is to turn those scattered paragraphs into a few cross‑standard thinking routes so that, in complex scenarios, you are not stuck on a single standard but know how to use them together.
What You Should Be Able To Do After Reading?
By the end, you should be able to:
- Explain how HKAS 10 and HKAS 37 work together for lawsuits, guarantees and other contingent liabilities: when to adjust provisions and when to just update contingent‑liability disclosures.
- Understand HKAS 1’s requirements on going concern and events after the reporting period, and how note structure can reflect your HKAS 10 judgments (for example, major non‑adjusting events and dividends declared after year‑end).
- See how HKFRS 3 and HKFRS 5 fit into post‑year‑end business combinations and held‑for‑sale situations: which parts are governed by HKAS 10 and which are driven by those other standards.
- Grasp how tax law changes and fair value information sit within the HKAS 10 framework, including when they affect amounts under HKAS 12, HKFRS 9 and HKFRS 13 and when they only affect disclosure.
- Use a simple “multi‑standard” answering strategy for exam and practical composite questions, so you can break issues into parts, avoid duplication and avoid missing disclosures.
1. HKAS 10 and HKAS 37 – lawsuits and contingent liabilities after year‑end
HKAS 37 Provisions, Contingent Liabilities and Contingent Assets (equivalent to IAS 37) tells you whether to recognise a provision or only disclose a contingent liability at the reporting date. HKAS 10 then asks: when new information arrives after the reporting period, do we need to go back and change the year‑end numbers or just update disclosures?
For lawsuits, you can think of the connection like this:
- HKAS 37 at year‑end:
- Ask whether a present obligation exists, whether an outflow of resources is probable, and whether the amount can be reliably estimated.
- Based on this, decide whether to recognise a provision or disclose a contingent liability only.
- HKAS 10 after year‑end:
- Ask what new information appears in, say, April to June.
- Decide whether the new information confirms conditions that already existed at year‑end (adjusting event) or reflects new conditions after year‑end (non‑adjusting event).
A simple step‑by‑step way to handle this:
- At year‑end (for example 31 March), use HKAS 37 to decide: recognise a provision, or disclose a contingent liability, or neither.
- During the post‑year‑end period, classify new information into:
- Evidence confirming a year‑end condition (adjusting event).
- Information about a new post‑year‑end condition (non‑adjusting event).
- If adjusting: re‑measure the provision at year‑end, or in some cases upgrade a previously disclosed contingent liability into a provision.
- If non‑adjusting: update contingent‑liability disclosure if the event is material, but do not change year‑end figures.
Example – lawsuit settlement:
- The company is sued in 2024 over alleged product defects.
- At 31 March 2025, the case has not been decided; based on lawyers’ advice, a provision is recognised.
- In May 2025, the court issues a judgment, and the compensation amount is higher than initially estimated.
Here, HKAS 10 treats the judgment as an adjusting event:
- The obligation existed at 31 March.
- The May judgment simply provides better evidence and requires the provision to be increased.
- The notes should also be updated: the lawsuit is no longer a contingent liability, and the final judgment and amount now form part of the provision disclosure.
In contrast, if a completely new claim arises only after year‑end relating to an accident that happened in April, HKAS 10 normally treats this as a non‑adjusting event: you consider contingent‑liability disclosure in the notes, but you do not alter the 31 March numbers.
2. HKAS 10 and HKAS 1 – presentation, notes and going‑concern disclosures
HKAS 1 Presentation of Financial Statements (equivalent to IAS 1) deals with the overall presentation of the financial statements: the structure of the primary statements, the content and ordering of notes, and the going‑concern assessment and related disclosures. HKAS 10 explicitly points to HKAS 1 when post‑year‑end events raise going‑concern questions.
Key links include:
- If post‑year‑end events cause management to intend to liquidate the company or cease trading, the financial statements should no longer be prepared on a going‑concern basis; HKAS 1 requires management to explain the reasons and describe the new basis of preparation in the notes.
- If going concern is still appropriate but there is a material uncertainty (for example, major unresolved bank refinancing or the loss of a critical customer), HKAS 1 requires full disclosure of the uncertainty, the key events after the reporting period and management’s plans.
HKAS 10 also ties into HKAS 1 in relation to dividends declared after the reporting period:
- If the board declares dividends after year‑end, the dividend is not recognised as a liability at the reporting date.
- HKAS 1 requires these post‑year‑end dividends to be disclosed in the notes, usually in the section on equity and reserves.
When designing note structure, you might think in this way:
- Include a dedicated note called “Events after the reporting period”, where you list major non‑adjusting events such as post‑year‑end acquisitions, fires or significant financing transactions.
- If there is a material uncertainty related to going concern, expand on it in the notes on “Significant accounting estimates and judgments” or “Financial risk management”, clearly linking to the relevant post‑year‑end events.
- Present post‑year‑end dividends in the “Share capital and reserves” or “Capital management” note, with a cross‑reference to the “Events after the reporting period” note.
This way, HKAS 10 judgments are naturally embedded into the HKAS 1‑driven disclosure structure, making the financial statements easier to read and review.
3. HKAS 10 with HKFRS 3 and HKFRS 5 – post‑year‑end deals and held‑for‑sale assets
When post‑year‑end events involve acquiring or disposing of a business, HKAS 10 stops being the only player.
- HKFRS 3 Business Combinations (equivalent to IFRS 3) sets the rules for accounting for business combinations: identifying the acquirer, determining the acquisition date, applying the acquisition method and recognising goodwill.
- HKFRS 5 Non‑current Assets Held for Sale and Discontinued Operations deals with classification and presentation when assets or components of the business are held for sale or discontinued.
In the context of events after the reporting period, you often see two types of situations.
Business combination happens only after year‑end
Example:
- Year‑end is 31 March.
- The company gains control of another company in May.
Normally:
- Under HKAS 10 this is a non‑adjusting event: you do not bring the acquisition into the 31 March balance sheet.
- At the same time, HKFRS 3 sets out additional disclosure requirements: the nature of the acquisition, identifiable assets and liabilities, goodwill and any provisional amounts.
- From the HKAS 10 perspective, this is a major post‑year‑end event, so you explain in the notes what happened and the expected impact, without changing year‑end figures.
Held‑for‑sale classification only reached after year‑end
Example:
- In April, management formally decides to sell a subsidiary and starts an active programme to locate a buyer, meeting HKFRS 5’s criteria that the asset is available for immediate sale and the sale is highly probable.
- At 31 March, however, these conditions were not yet met.
In that case:
- In the 31 March financial statements, you normally do not classify the disposal group as held for sale, because the HKFRS 5 criteria were not met at year‑end.
- The April decision and subsequent actions are treated as a non‑adjusting event under HKAS 10; if material, you disclose them in the notes.
- The held‑for‑sale classification is only applied in the next reporting period when the criteria are satisfied at that period’s reporting date.
You can summarise the division of roles like this:
- HKAS 10: decides whether a post‑year‑end event changes the 31 March numbers and whether it needs to be disclosed as an event after the reporting period.
- HKFRS 3 / HKFRS 5: once a transaction actually takes place or criteria are met, they govern recognition, measurement and presentation in the relevant period.
4. HKAS 10 with HKAS 12, HKFRS 9 and HKFRS 13 – tax law changes and fair value information
Post‑year‑end events often touch tax and fair value, which brings HKAS 12, HKFRS 9 and HKFRS 13 into the picture.
Tax rate or tax law changes
HKAS 12 Income Taxes requires deferred tax to be measured based on tax laws and rates that have been enacted or substantively enacted by the reporting date. So if new tax legislation is passed only after year‑end, it is usually treated as a non‑adjusting event:
- Deferred tax assets and liabilities at 31 March are not recalculated just because a new tax law is passed in April.
- If the change has a significant impact on future tax charges, it is appropriate to disclose the nature of the change and the expected impact as an event after the reporting period.
However, if the tax law was substantively enacted before year‑end (for example, it was approved in the legislature and only formal publication remained), then the new rate may represent a condition existing at the reporting date. In that case, under HKAS 10 this becomes an adjusting event: you re‑measure deferred tax at the new rate as at the reporting date.
The key again is: did the new tax rate effectively exist at the reporting date, or only after?
Fair value changes and market information
HKFRS 9 Financial Instruments requires certain financial assets and liabilities to be measured at fair value, and HKFRS 13 Fair Value Measurement provides the framework, emphasising the use of market data available at the reporting date.
Within the HKAS 10 framework:
- If market prices or interest rates move after year‑end and these movements simply reflect new post‑year‑end conditions, they are normally non‑adjusting events; you do not restate the 31 March fair values.
- If information received after year‑end reveals a condition that actually existed at the reporting date but was not known then, it may be an adjusting event requiring re‑measurement of fair values or expected credit losses.
Example:
- The company holds a bond investment and its year‑end is 31 March.
- In April, it is discovered that the issuer actually breached significant loan covenants in mid‑March, but this information was only made public after year‑end.
In substance, the credit deterioration already existed at 31 March; the April announcement is merely delayed information. This tends to be an adjusting event: you reassess fair value and impairment at 31 March using this new evidence.
5. When multiple standards show up at once – a practical strategy
When HKAS 10, HKAS 37, HKAS 1, HKAS 12, HKFRS 3 and others all appear together, two problems arise easily:
- You are not sure which standard to apply first.
- You repeat the same explanation under different standards or forget some disclosures entirely.
A simple four‑step framework can help you organise your answer (or your analysis at work).
Step 1 – Start with HKAS 10: classify the event
For every post‑year‑end event, first ask:
- Is this an adjusting or non‑adjusting event under HKAS 10?
- Is it material?
This “gatekeeper” step decides whether you change the 31 March numbers and whether disclosure is required at all.
Step 2 – Then move to the topic‑specific standard
Once you know adjusting vs non‑adjusting, you can call in the “specialist” standard:
- Lawsuits, guarantees, restructurings → HKAS 37 for provisions and contingent liabilities.
- Going concern and major uncertainties → HKAS 1 for basis of preparation and disclosure format.
- Business combinations and disposals → HKFRS 3 / HKFRS 5 for detailed accounting and disclosure.
- Tax and fair value issues → HKAS 12, HKFRS 9 and HKFRS 13 to measure the amounts.
Step 3 – Integrate into the financial‑statement and note structure
Imagine the final set of financial statements:
- Which notes need a dedicated “Events after the reporting period” section?
- Where do you place HKAS 37 contingent‑liability tables, HKFRS 3 acquisition disclosures or HKAS 1 going‑concern notes?
- How do you cross‑reference them so the story is coherent and readable?
Step 4 – In working papers, use a “per event × per standard” layout
A practical way to write working papers or exam answers:
- One block per event: briefly describe the event.
- State your HKAS 10 conclusion (adjusting vs non‑adjusting, material or not).
- List the other standards involved (HKAS 37, HKAS 1, HKFRS 3, HKAS 12, HKFRS 9 / 13, etc.).
- Summarise the impact on amounts and disclosures.
This helps you avoid duplication and omissions, and it makes your logic easy to follow for reviewers or exam markers.
6. Turning HKAS 10 into your “cross‑standard hub”
If you look at HKAS 10 in isolation, it is easy to treat it as just a classification tool for post‑year‑end events. Once you see it alongside HKAS 37, HKAS 1, HKFRS 3, HKAS 12, HKFRS 9 and HKFRS 13, HKAS 10 starts to look more like a hub that decides:
- Which events require changes to year‑end amounts.
- Which events stay at the disclosure level only.
- Which events, once classified, push you to adjust or apply other standards.
When you work through composite questions or real‑life annual reports, you can deliberately practise this mindset:
- For every post‑year‑end event, first pass it through HKAS 10.
- Then ask yourself: does this trigger HKAS 37? Does it affect HKAS 1 going‑concern disclosures? Does it bring in HKFRS 3 / 5 / 9 / 13?
Over time, your understanding will shift from memorising isolated rules to moving smoothly between standards as a network. That is a key step from “knowing the words” to making solid, practical accounting judgments.
Key takeaways for students and junior accountants
- Treat HKAS 10 as your first “filter” for all post‑year‑end events: classify adjusting vs non‑adjusting, then decide whether to adjust numbers, disclose, or both.
- Once classification is clear, bring in the topic standards: HKAS 37 for provisions, HKAS 1 for going concern and presentation, HKFRS 3 / 5 for acquisitions and disposals, HKAS 12 / HKFRS 9 / 13 for tax and fair value measurement.
- In exams and working papers, structure your answer or documentation per event, explicitly stating: what happened, your HKAS 10 classification, which other standards are triggered and what the accounting outcome is.
- When in doubt about tax and fair value, always ask whether the new information reflects a condition that already existed at the reporting date; if yes, you are likely in adjusting‑event territory.
- When reading contracts, correspondence and board minutes around year‑end, get into the habit of mapping each item through this cross‑standard route; that habit is exactly what turns HKAS 10 from a “small” standard into a central part of your real‑world IFRS toolkit.
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