How do firms report a material subsequent event on the financial$$ statements?

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Part $1$

A$.$

Material subsequent events must be both reported in the financial statements and disclosed in the notes to the financial statements in the current year. The decision to report and disclose is based on the level of detail necessary to fully report and disclose material subsequent events and related information.

B$.$

Material subsequent events should only be disclosed in the notes to the financial statements. The impact of the disclosure is then available to the user of the information for further consideration.

C$.$

Material subsequent events should be reported in the financial statements for the following year or be disclosed in the notes to the financial statements in the current year. The decision as to recognition versus disclosure depends upon whether the event relates to a condition that existed on the balance sheet date. If the condition existed on the balance sheet$$ date, an adjustment should be made to the financial statements to account for the subsequent event information.

D$.$

Material subsequent events should either be recognized in the financial statements for the preceding year or be disclosed in the notes to the financial statements. The decision as to recognition versus disclosure depends upon whether the event relates to a condition that existed on the balance sheet date$($the end of the fiscal$$ year$).$ If the condition existed on the balance sheet$$ date, an adjustment should be made to the financial statements to account for the subsequent event information.