12 February 2013
Hello sir, please explain:- what are transactions and events ? What is the difference between them ? depreciation and last year's brought forward balances are transactions or events ? Thank you.
Transaction means an agreement between two parties to exchange some asset against payment or a condition which is required to be booked into accounts.
Whereas the event has two dimensions i. adjustable and ii. non adjustable. Adjustable event means a condition between the closing date and reporting date of the financial statements which can affect the balance sheet as on closing date e.g settlement of some court case, decline in NRV of the inventory etc. Whereas the non adjusting events means those conditions which have no affect on the closing date of financial statements e.g. decision to discontinue operations, dividend payment, major business combination, destruction of plant and property, change in tax rate etc. there is a long list for these two events. please refer to IAS 10 for further details.
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