Which of the following would be a Type II subsequent event?
A)Information becomes available that provides evidence about the valuation of an estimate or reserve that had been accrued at year end.
B)A sale of inventory below carrying value provides evidence that the net realizable value was less than cost at year end.
C)A stock dividend or split that takes place during the subsequent period should be disclosed.In addition,earnings-per- share figures should be adjusted to show the retroactive effect of the stock dividend or split.
D)A material change occurs in the value of investment securities after the balance sheet date.

Question

Quizplus · Accepted Answer

A material change occurring in the value of investment securities after the balance sheet date is a Type II subsequent event as it provides evidence about conditions that arose subsequent to the balance sheet date, indicating that the financial statements may require adjustment. The other options (A, B, and C) are Type I subsequent events as they provide evidence about conditions that existed at or before the balance sheet date, indicating the need for adjustment to the financial statements.

Which of the Following Would Be a Type II Subsequent