What are subsequent events, according to IAS 10?

Subsequent events, as defined by IAS 10, pertain specifically to events that occur between the reporting date and the approval date of the financial statements. This period is critical because it allows for the recognition of events that may necessitate adjustments to the financial statements or require disclosure.

In practice, subsequent events can be categorized into two types: those that provide additional evidence of conditions that existed at the reporting date, which would lead to adjustments in the financial statements, and events that indicate conditions arising after the reporting date, which typically do not result in adjustments but may require disclosure.

The core of the correct understanding lies in recognizing that subsequent events bridge the critical timeline before a set of financial statements is finalized and approved. This accounting standard ensures that users of the financial statements have all relevant information available up until the time the financial statements are authorized for issuance, providing a more truthful representation of the entity’s financial status.

The other choices reflect misconceptions about subsequent events. For instance, events occurring after the approval of financial statements are not considered subsequent events under IAS 10, as they occur outside the timeframe necessary for adjustments or disclosures. Additionally, while some subsequent events may not require adjustment of the financial statements, they still need to be disclosed, which is not