Subsequent Event

1
Subsequent Event

• Events that occur after the close of the fiscal
  year, before financial statements are published.
  
• Three types possible, require different treatment

2
Subsequent Events

• Event is a culmination of prior conditions and
  has material effect
• Event is the result of new developments and has a
  major effect
• Event is the result of new developments and does
  not have a major effect

3
Subsequent Event - Culmination of prior condition

• Requires adjustment of balance sheet
• Example Major customer declares bankruptcy
• Required action Adjust accounts receivables,
  recognize loss on income statement

4
Subsequent Event Result of new development

• Event has a material effect
• e.g. major plant facility is destroyed
• Action required Footnote disclosure
• Event does not have material effect
• Ignore (will be recognized in new fiscal year)