An example of a Type II subsequent event would be the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.

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A Type II subsequent event refers to events that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The bankruptcy of a client's customer due to poor financial condition existing as of the balance sheet date would be considered a Type I subsequent event, as it provides additional evidence about conditions that existed at the balance sheet date.

An Example of a Type II Subsequent Event Would Be