What is a subsequent event?
In general, subsequent events covers information that surfaces to managements attention after the date of the financial statements, but prior to the issuance of the financial statements.
For example, if the company has a year-end date of December 31, Year 1, and the financial statements are not issued until March 15, Year 2, then any significant changes that arise from December 31, Year to March 15, Year 2 should be evaluated and potentially included in the notes to the financial statements.
There are two types of subsequent events, and each one is treated separately in the financial statements. The two types include a “recognized subsequent event (type I) and “nonrecognized subsequent events (type II):
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