FAR-F2-M2-Subsequent Events

Question 1

What is the definition of a subsequent event?

Answer 1

These are events that occur after the balance sheet date, but before the financial statements are issued.

Question 2

What is the treatment of a recognized subsequent event?

Answer 2

Conditions that exited at the balance sheet date require recognition in the financial statements.

Question 3

What is the treatment of an unrecognized subsequent event?

Answer 3

These are conditions that DID NOT EXIST at the balance sheet date require disclosure in the footnotes. If an estimate is REASONABLY POSSIBLE to occur and an estimate is known, then an estimated financial impact should be disclosed. Otherwise, if an estimate cannot be determined or it is NOT REASONABLY POSSIBLE, then a statement that no estimate can be made should be disclosed.

Question 4

What is the subsequent evaluation period for an SEC filer?

Answer 4

1. An entity that files financial statements with the SEC, must evaluate subsequent events THROUGH THE DATE THAT THE FINANCIAL STATEMENTS ARE ISSUED.
2. Financial statements are considered to be issued when they are in a form that complies with GAAP and have been widely distributed to financial statement users.

Question 5

Are SEC filers required to disclose the date through which subsequent events have been evaluated?

Answer 5

No. Only NON-SEC filers are required to disclose the date through which subsequent events have been evaluated.

Question 6

What is the subsequent evaluation period for Non-SEC filers?

Answer 6

1. Non-SEC filers are required to evaluate subsequent events through the date that financial statements are AVAILABLE TO BE ISSUED.
2. That date is defined as the date when the financial statements are in a form that comply with GAAP and by which all approvals for issuance have been obtained.