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There are generally two types of subsequent events. 1)The first is a recognized event whereas the second is a non-recognized event. Recognized or type 1 subsequent events are typically events that occurred at the financial statement date.

Subsequent Event Reporting A business combination. Changes in the value of assets due to changes in exchange rates. Destruction of company assets. Entering into a significant guarantee or commitment. Sale of equity. Settlement of a lawsuit where the events causing the lawsuit arose after the balance sheet date.

Subsequent Event Reporting A business combination. Changes in the value of assets due to changes in exchange rates. Destruction of company assets. Entering into a significant guarantee or commitment. Sale of equity. Settlement of a lawsuit where the events causing the lawsuit arose after the balance sheet date.

The settlement of litigation for an amount different from the liability recorded in the accounts would require adjustment of the financial statements if the events, such as personal injury or patent infringement, that gave rise to the litigation had taken place prior to the balance-sheet date. .

An example of a type I event is litigation where the event leading to the claim occurred during one year, but is settled during the following year. The settlement provides subsequent evidence about the value of the then-pending claim at year-end.

There are two types of subsequent events: Adjusting events. An event that provides additional information about pre-existing conditions that existed on the balance sheet date. Non-adjusting events. A subsequent event that provides new information about a condition that did not exist on the balance sheet date.

Companies categorize accounting events as either internal or external events.

Type II subsequent events provide evidence about conditions that did not exist on or before the balance sheet date. These events are disclosed, but are not recognized in the financial statements.

Subsequent events clarify information about a business' financial picture as reflected by the balance sheet, a financial report that includes all transactions through the report date.

The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements (that is, recognized subsequent events).