Subsequent Event Events that occur after the close of the fiscal year, before financial statements are published. Three types possible, require different treatment

Subsequent Events: Event is a culmination of prior conditions and has material effect Event is the result of new developments and has a major effect Event is the result of new developments and does not have a major effect

Subsequent Event - Culmination of prior condition Requires adjustment of balance sheet: Example: Major customer declares bankruptcy: Required action: Adjust accounts receivables, recognize loss on income statement

Subsequent Event: Result of new development Event has a material effect: e.g.: major plant facility is destroyed Action required: Footnote disclosure Event does not have material effect: Ignore (will be recognized in new fiscal year)