medium · Financial Accounting liabilities-bonds-payable
A lawsuit was filed against a company in November 2025. In February 2026, before the 2025 financial statements were issued, the company settled the case for a known amount. This is a:
- Type 2 subsequent event that requires footnote disclosure only, with no adjustment to amounts.
- A change in accounting principle requiring full retrospective application to prior periods.
- A gain contingency that cannot be recognized in the financial statements until 2026.
- Type 1 subsequent event that requires adjustment of the 2025 financial statements.
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