M3 - Subsequent Events

Question 1

What is required for a “reasonably possible” loss?

Answer 1

Only footnote disclosure. The nature of the contingency should be disclosed as well as the nature of the possible loss or range of loss.

Question 2

The subsequent event evaluation period for a “filer” (an entity that files its financial statements with the SEC) is through what date?

Answer 2

The date that its financial statements are issued. The date that financial statements are issued is the date that its financial statements have been widely distributed to financial statement users in a form and format that comply with GAAP.

Question 3

The subsequent event evaluation period for all other entities that are not considered a “filer”(an entity that files its financial statements with the SEC) is through what date?

Answer 3

The date the financial statements are available to be issued. The date that the financial statements are available to be issued is the date that its financial statements are in a form and format that comply with GAAP and all approvals for issuance have been obtained.

Question 4

True or false? A company that files F/S with the SEC must disclose when its subsequent event evaluation period ends.

Answer 4

False

Question 5

True or false? A company that doesn’t file F/S with the SEC must disclose when its subsequent event evaluation period ends.

Answer 5

True, Entities that do not file their F/S with the SEC are required to disclose both the date through which the subsequent events have been evaluated along with whether that date is the date that the F/S were issued or the date the F/S were available to be issued.