Whenever subsequent events are used to evaluate the amounts included in the statements, care must be taken to distinguish between conditions that existed at the balance sheet date and those that come into being after the balance sheet date. The subsequent information should not be incorporated directly into the statements if the conditions causing the change in valuation
A) took place before the balance sheet date.
B) did not take place until after the balance sheet date.
C) occurred both before and after the balance sheet date.
D) are reimbursable through insurance policies.

Question

Quizplus · Accepted Answer

Subsequent events that occurred after the balance sheet date should only be considered if they provide additional information about conditions that existed at the balance sheet date, but were not known at that time. If the conditions that led to the change in valuation did not exist until after the balance sheet date, they should not be incorporated into the statements.

Whenever Subsequent Events Are Used to Evaluate the Amounts Included