F2 - M3 - Subsequent Events

Question 1

Subsequent Events

Answer 1

event or transaction AFTER BS date but BEFORE F/S

Question 2

Recognized Subsequent Event

Answer 2

Record and disclose, existed at BS date

• Settlement of Litigation – arose before BS date
• Loss on an uncollectible receivable – bankruptcy after BS date, before F/S

Question 3

Nonrecognized Subsequent Events

Answer 3

Disclose only, did not exist at BS date

Happened after the balance sheet and did not exist at the BS date
o Sale of bond or capital stock
o Business combination
o Settlement of litigation
o Loss of plant or inventory due to fire or natural disaster
o Other significant commitments or contingent liabilities
o Loss on receivables occurring AFTER the BS date

Question 4

Subsequent event evaluation period

Answer 4

• Public companies, SEC, must evaluate through the date the F/S are issued
• Private companies, subsequent events through date F/S are available to be issued

Question 5

Reissuance of Financial Statements

Answer 5

should NOT recognize events that occurred between the date of the original F/S issuance and when re-issued

Question 6

IFRS

Answer 6

“events after the reporting period”, from reporting period through the “authorized” for issuance date

Question 7

Revised Financial Statements

Answer 7

revised to correct an error or to reflect retrospective application, “REISSUED” F/S