Ordinarily, type 2 subsequent events require: A) adjustment. B) adjustment and disclosure. C) a disclaimer. D) inclusion as a reportable condition. E) disclosure.

Question

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Type 2 subsequent events, which are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date, require disclosure in the financial statements to inform users about the situation and its potential financial impact. They do not require adjustment of the financial statements because they pertain to conditions that arose after the balance sheet date.

Ordinarily, Type 2 Subsequent Events Require