Which of the following can illustrate a subsequent event that requires disclosure but not adjustment?
A)Settlement of long outstanding litigation.
B)Collection of a customer debt that had been written off.
C)Loss of inventory as a result of a flood occurring after year-end.
D)An additional tax assessment on prior income.

Question

Quizplus · Accepted Answer

Subsequent events that require disclosure but not adjustment in the financial statements include events that provide additional information about conditions that did not exist at the balance sheet date but arose after that date. The loss of inventory as a result of a flood occurring after year-end is an example of such an event, as it provides information about a condition (the flood) that did not exist at the balance sheet date but could affect the entity's operations or financial position in the future.

Which of the Following Can Illustrate a Subsequent Event That