F2 M3 Subsequent events Flashcards
What is subsequent event?
Event or transaction that occur after B/s date but before issue of financial statement or available to issue.
Recognize subsequent event
Record
Existed on B/s Date
Existed on B/s date
Event
1. Settlement of litigation
2. Loss on noncollectable receivable
Non -Recognize subsequent event
Disclosure only
Occur after B/s date but before issue of fin statement or availa to issue
- Sale of bond or capital stock
- Business combination
- Settlement of litigation if the litigation arose after B/s date
- Loss of plant or inventory in fire or natural disaster.
- Changes in FV of Assets
- Entering into significant commitment or liabilities
- Loss of receivable -condition after b/s date
Subsequent event evaluation period
Listed - SEC-Through fin statement issued
Unlisted-Issued or available to issue and must disclose till what period it is evaluated(only for unlisted)
Re issuance of Fin statement and subsequent event
Should not recognize event that has occur between original issue or available to issue and reissue
Unless require by GAAP or Other regulatory body.
IFRS-Sub event
IFRS
Event after reporting period
Subsequent event evaluation period extends from B/s date to Fin stat authorized to issue.
Recognized event-Adjusting event after B/s date
Unrecognized event -non adjusting event after B/s date
Important -
If mngt determines after B/s date, it intends to liquidate company, can not prepare going concern basis,
Revised Fin statement and Sub event
Revised statement - revised to correct error -considered to be reissued
Non listed -required to disclose date till what even it evaluated. issue date or availa to issue.
No disclosure is required in case of listed co,
10 Million note payable refinance in feb before issuance of fin state
Liability -
Non current
Disclosure required.
