Adjusting events
You'll learn how to distinguish adjusting events from non-adjusting events and understand when to modify financial statements after the reporting period. Adjusting events provide further evidence of conditions that existed at year-end, so you adjust the figures in the financial statements.
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In this lesson
- 0:00 Adjusting events explained
- 1:02 Common examples of adjusting events
- 3:00 Hillier Limited case study
- 4:58 Non-adjusting events and disclosure requirements
About this lesson
Non-adjusting events occur after year-end and couldn't have been predicted, so you disclose them separately if material. This distinction is critical for Financial Reporting and SBR, where accurate financial statement preparation depends on correctly classifying post-period events. The video walks you through the key test: could you reasonably have expected this at the reporting date? If a customer goes bankrupt after year-end but showed signs of trouble before it, that's adjusting. If a fire destroys equipment after year-end with no prior warning, that's non-adjusting. You'll see practical examples including customer insolvencies, court case settlements, fraud discovery, asset impairment, and inventory valuation changes—all scenarios you'll encounter in exam questions. The session reinforces how to apply double-entry adjustments to prior-year figures and when disclosure alone is sufficient, giving you confidence to handle these tricky post-period situations.
Duration: 5m
Transcript
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