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ASC 855-10-55-1(b) Subsequent events affecting the realization of assets, such as inventories, or the settlement of estimated liabilities, should be recognized in the financial statements when those events represent the culmination of conditions that existed over a relatively long period of time.

Examples might include a change in foreign exchange rates, a fire or an unexpected natural disaster that severely damages the business. Generally, the former must be recorded in the financial statements. The latter type of subsequent event isn't required to be recorded but may have to be disclosed in the footnotes.

If the liability is likely to occur and the amount can be reasonably estimated, the liability should be recorded in the accounting records of a firm.

An example of a subsequent event that is an adjusting event is the settlement of a lawsuit that happened before the balance sheet date. The company would have assessed an amount for contingent losses pending the lawsuit.

The footnotes present required disclosures, accounting methodologies used, any modifications to methodologies from previous reporting periods, and upcoming transactions that may affect future profitability.

A subsequent event is an event that occurs after the balance sheet date but before the financial statements are issued. Such events can significantly impact an organization's financial position and, therefore, must be considered when preparing financial statements.

Notes to the financial statement include important factors that were used in preparing the statement. Notes will include information such as cash or accrual accounting procedures, valuation me5ids for inventory, reporting of events, intangible assets, and contingent liabilities.