Lesson: Subsequent Events Example

In this lesson, join Nick Palazzolo, CPA, as he navigates the complex landscape of subsequent events through an illustrative scenario featuring Power Logic, a tech company and SEC filer. Get a clear understanding of when to record, footnote, or disregard specific events post-financial statement date. For instance, witness how a legal ruling, set post-balance sheet but pertaining to the financial year in question, translates into a recorded liability—contrasted with a future acquisition plan that is merely footnoted. Additionally, Nick demystifies how to adjust accounts receivable for a bankrupt client's unrecoverable debt, while teasing out why certain events, like a customer's untimely misfortune after year-end, require disclosure but no retroactive financial adjustments. This practical exploration of accounting judgments sharpens the approach to financial statement accuracy and the nuances of GAAP and FASB rules regarding subsequent events.