What does subsequent event mean on the CPA exam?
Subsequent event. Something that happens between the balance sheet date and the date the statements are issued. It is recognized if it reveals a condition that already existed, and only disclosed if the condition arose after.
Defined against ASC 855-10-25.
Which CPA exam sections use subsequent event?
Subsequent event appears in 6 CPA exam sections: AUD, BAR, FAR, ISC, REG, TCP.
Other terms defined against ASC 855-10
- balance sheet date: The last day of the reporting period.
- Type 1 subsequent event: A recognized subsequent event: it gives evidence about a condition that already existed at the balance sheet date, so the statements are adjusted.
- Type 2 subsequent event: A nonrecognized subsequent event: the condition came into existence after the balance sheet date, so it is disclosed and never adjusted.
Related terms
- balance sheet: A snapshot at one date of what the entity owns, what it owes, and the owners' residual.
- built-in loss: Loss that already existed in property before it changed hands, measured at the transfer date.
- income statement: The statement of what was earned and spent over a period, ending in net income.
- loss contingency: An existing condition involving uncertainty that may produce a loss, resolved by a future event.
- carrying amount: What an asset or liability is currently shown at on the balance sheet: its original amount adjusted for depreciation, amortization, impairment or accrual.
- financial statements: The formal set an entity publishes: balance sheet, income statement, statement of cash flows, statement of changes in equity, and the notes.