For Type 2 events, what disclosures are required?

• A. Nature of the event; estimates of its financial impact, or a statement that the estimate cannot be made
• B. Date of the event only
• C. Name of the event sponsor
• D. Regulatory citation only

Answer: (A)

For Type 2 events, the disclosures should describe what happened and its potential financial effect. You disclose the nature of the event and provide an estimate of its financial impact, or state that an estimate cannot be made. This gives readers a clear understanding of the event and how it might affect the statements. Merely giving the date, the sponsor’s name, or a regulatory citation doesn’t convey the event itself or its financial implications, so those do not fulfill the disclosure requirement. For example, if after the reporting date a significant lawsuit arises, you would describe the nature of the lawsuit and provide an estimated loss range, or state that an estimate isn’t yet available.