If an entity declares dividends to holders of equity instruments after the reporting period, the entity shall not recognise those dividends as a liability at the end of the reporting period.
If dividends are declared after the reporting period but before the financial statements are authorised for issue, the dividends are not recognised as a liability at the end of the reporting period because no obligation exists at that time. Such dividends are disclosed in the notes in accordance with IAS 1
5 Going concern
An entity shall not prepare its financial statements on a going concern basis if management determines after the reporting period either that it intends to liquidate the entity or to cease trading, or that it has no realistic alternative but to do so.
This requires change in the basis of accounting rather than adjustments to previously recognized figures. In addition to that IAS 1 disclosure requirements also needed to be fulfilled i.e.:
- financial statements are not prepared on going-concern basis
- management is aware of such events that cast significant doubts on entity’s ability to be remain going concern (which may arise after the reporting period)
- An entity shall disclose the date when the financial statements were authorized for issue including:
- who gave that authorisation.
- If the entity’s owners or others have the power to amend the financial statements after issue
- The entity shall update disclosures relating to conditions that existed at reporting date in the light of new information received after the reporting date.
- Non-adjusting events of material nature could influence the use of financial statements. Therefore, entity should disclose the following for each material category of non-adjusting event after the reporting period:
- The nature of the event
- Estimated financial effect or disclaimer of such an estimate