ASC 855 Subsequent Events Memo
The date the evaluation runs to, each event after the balance sheet date sorted into recognise, disclose or neither, and the evaluation-date note where one is owed.
An SEC filer evaluates through the date the statements are issued; so does a conduit bond obligor whose conduit debt trades in a public market. Everyone else evaluates through the date they are available to be issued. The memo asks which you are rather than deciding it.
One line per event. The question that decides each one is whether its condition already existed at the balance sheet date. The memo never answers that for you.
Informational only — not audit, attest, legal, tax, or investment advice. We are the preparer, never the filer of record. Unfolding Values is not an audit firm.
Subsequent events: one date, one question per event
A subsequent-events memo is short when it is right, and it is right when two things are settled before anything else is written. The first is the date the evaluation runs to. An SEC filer runs to the date the financial statements are issued; so does a conduit bond obligor whose debt trades in a public market; everyone else runs to the date the statements are available to be issued. Getting that wrong moves the window, and an event inside the real window but outside the assumed one is the event that surfaces in the review.
The second is the question asked of every event in the window: did the condition behind it exist at the balance sheet date? An event that gives more evidence about a condition already there at that date is recognised. An event whose condition arose afterwards is not, and is disclosed where leaving it out would mislead, with its nature and an estimate of its effect or a statement that no estimate can be made. Which side a given event falls on is your judgment; the memo records it and applies the rule that follows.
This tool fixes the evaluation date from your answers, sorts each event you enter into recognise, disclose or neither with the paragraph that decides it, drafts the evaluation-date note where one is owed, and applies the reissuance rule when statements are reissued or revised. It does not decide whether a condition existed at the balance sheet date, whether silence would mislead, or any amount. Those are the judgments the whole memo turns on, and it asks for them rather than inventing them.
Frequently asked questions
Through which date do we evaluate subsequent events?
It depends on what kind of entity you are, and the memo asks rather than guesses. ASC 855-10-25-1A sends an SEC filer, and a conduit bond obligor whose conduit debt securities trade in a public market, to the date the financial statements are issued. ASC 855-10-25-2 sends every other entity to the date they are available to be issued. Both terms, and SEC filer itself, are defined in the Master Glossary, which you apply.
What decides whether an event is recognised or only disclosed?
One question: did the condition behind it already exist at the balance sheet date? If it did, and the event gives more evidence about it, its effects are recognised, estimates included (ASC 855-10-25-1). If the condition arose after that date, the effects are not recognised (ASC 855-10-25-3), and the next question is whether leaving it out of the notes would mislead.
What goes in the note for an event we do not recognise?
Where silence would mislead, ASC 855-10-50-2 asks for the nature of the event and either an estimate of its financial effect or a statement that no estimate can be made. The memo refuses to draft the note with only one of those two. Where the event is significant enough, ASC 855-10-50-3 asks you to consider pro forma data as if it had happened at the balance sheet date.
Do we have to disclose the date we evaluated through?
An entity that is not an SEC filer does: ASC 855-10-50-1 requires the date and whether it is the issued or the available-to-be-issued date, and the memo drafts that sentence. The paragraph is written for an entity that is not an SEC filer, and the memo says so rather than drafting one for an SEC filer.
We are reissuing last year's statements. Do we pick up everything that has happened since?
No. ASC 855-10-25-4 says events between original issuance and reissuance are not recognised unless GAAP or a regulatory requirement requires the adjustment. Revised statements count as reissued statements (ASC 855-10-50-5), and an entity that is not an SEC filer discloses both evaluation dates in them (ASC 855-10-50-4).