Accounting Treatment and Disclosure (IAS 10):

1. Definition of Events After the Reporting Period:
Under IAS 10, events after the reporting period are those favorable or unfavorable events that occur between the end of the reporting period and the date when the financial statements are authorized for issue. Events are categorized as:

• Adjusting Events: Those that provide additional evidence of conditions that existed at the reporting date.
• Non-Adjusting Events: Those that are indicative of conditions that arose after the reporting date.

2. Analysis of the Event:

• The court ruling on March 15, 2019, requiring Shawarma Limited to pay N90 million, occurred after the reporting date (December 31, 2018) but before the financial statements were authorized for issue (April 18, 2019).
• The court case was ongoing as of the reporting date, indicating that the liability related to conditions existing at the reporting date.

3. Accounting Treatment:
The event is an Adjusting Event because:

• The court decision provides additional evidence regarding the liability that existed at the reporting date.
• Shawarma Limited must recognize a provision of N90 million in its financial statements for the year ended December 31, 2018.

4. Disclosure Requirements:
Shawarma Limited should disclose the following in the notes to the financial statements:

• Nature of the Event:
  • A description of the court case, including details of the legal dispute.
• Financial Impact:
  • The amount of N90 million recognized as a provision in the financial statements.
• Uncertainty (if any):
  • If there is any uncertainty regarding payment or further appeals, this must also be disclosed.

Conclusion:
Shawarma Limited must adjust its financial statements for the year ended December 31, 2018, by recognizing a provision of N90 million and disclosing the nature and impact of the court ruling in accordance with IAS 10. This ensures faithful representation of the company’s financial position as of the reporting date.