A subsequent event occurs after the balance-sheet date but before the entity's applicable issuance endpoint. Its treatment depends on whether it supplies evidence about a condition that already existed or describes a new later condition.
Fix the evaluation window
Record the reporting entity, balance-sheet date, event and discovery dates, and the applicable endpoint. ASC 855-10-25-1A identifies entities that evaluate through the date statements are issued. ASC 855-10-25-2 uses the available-to-be-issued date for other entities. Do not assume those dates are the same.
Check specialized guidance before applying the general model. ASC 855-10-15-4 limits Topic 855 to events not addressed in another Codification Topic.
Distinguish evidence from a new condition
ASC 855-10-25-1 requires recognition of later events that provide added evidence about conditions existing at the balance-sheet date. A January customer bankruptcy might supply evidence about a December credit condition, depending on its cause and the governing credit-loss guidance.
ASC 855-10-25-3 does not recognize a later event that reflects a condition arising after the balance-sheet date. A February fire often creates such a new condition. Management must still investigate it and evaluate disclosure.
For a material nonrecognized event, ASC 855-10-50-2 calls for the event's nature and an estimate of financial effect, or a statement that an estimate cannot be made. Nonrecognition is not permission to ignore the event.
Use the loss-contingency matrix lesson for the condition-date distinction. The Cedar Trail example separates a December claim from a January fire. The release-control task checks the evidence cutoff.
This page does not establish the cause of an event, its materiality, the issuance endpoint, or the requirements for reissued statements.
Put the concept to work
Understand this concept
- Explain the difference between a balance-sheet-date condition, later evidence about that condition, a genuinely new later condition, and the entity-specific evaluation window.
Analyze this concept
- Analyze an event chronology for condition date, new and confirming evidence, specialized Topic precedence, recognized effects, disclosure, estimates, issuance authorization, and subsequent discovery.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Authoritative accounting guidance — Analyze
To analyze this concept: Required. Specialized Topic guidance can govern an event instead of the general Topic 855 model.
- Reporting entity — Understand
To understand this concept: Required. The reporting entity, date, and issuance status define the event evaluation context.
- Subsequent event — Understand
To analyze this concept: Required. The chronology must distinguish evidence about an existing condition from a new event.
Lessons
Worked examples and cases
- Granite Harbor: can the reporting packet leave review?
- Release Cedar Trail's liability, legal, and debt close
- Route Cedar Trail's legal matters and debt classification
Show 1 more examples and cases
Practice
- Analyze later evidence through the condition date
- Control a covenant breach and standards clock
- Decide whether a January incident changes the year-end statements
Show 2 more practice items
Common mistaken ideas
Sources
Standard references
Related concepts
Show 4 more related concepts
Use this idea next
- Subsequent event — Analyze
Required level here: understand. Required. The chronology must distinguish evidence about an existing condition from a new event.
- Subsequent-collection evidence — Understand
Required level here: understand. Required. Later collections must be connected to the reporting-date condition.
Used in these readings
These chapters explain or apply this concept. The label states how the chapter uses it.