Username:
Password:
Forgot Password?

AASB 110 - Events after the reporting period
Print this Article Print this Article
Email this Article

Summary 
Developments, Key Differences & History 
Compared to IFRS 
Interpretations 
Rejection Notices 
Questions & Answers 
Articles 
AASB website 

 
Decrease in market value of invesments since 30 June? 
as reported in ANT32/2008 
 
Q: The market values of some of my client's listed investments, classified as available for sale and therefore carried at fair value, have show a substantial decline since balance date in line with the decline in the market as a whole. What are the implications of this for their 30 June financial statements? Does a post 30 June market price movement get taken into account when considering the 30 June fair value? 
 
A: This issue is within the scope of AASB 110 Events After the Balance Sheet Date. This standard classifies events occurring after balance date into two types - adjustable and non adjustable. 
 
Adjustable events are those that provide evidence of conditions that existed at the reporting date, and so the standard requires that their effect is to be recognised in the financial statements by adjusting the relevant items in the financial records (paragraph 8). Non-adjusting events are those that are indicative of conditions that arose after balance date and therefore are not to be adjusted, but may be required to be disclosed (see paragraphs 10 and 21). 
 
Paragraph 11 of AASB 110 states that a decline in the market value of investments post balance date is an example of a non-adjusting event. This is because the decline does not usually relate to the conditions that existed at balance date, but rather to conditions that arose subsequently. 
 
Therefore, the change in market value should not normally be included in assessing fair value for June 30 – but if material, does require disclosure (under paragraph 21) which sets out the nature of the event and an estimate of the financial effect involved.