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Match each definition or example with the correct type of subsequent event. A flood damages a significant portion of the operating facility after year-end. During the audit, a customer with a large A/R balance at year-end declares bankruptcy. Type 1 Type 2 Additional evidence about conditions that existed at the balance sheet date. A lawsuit that was in progress as of year-end was settled shortly thereafter. Conditions that have come into existence after the balance sheet date.
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Given the following three subsequent events (unrelated) for the
December 31, 2018 year-end:
i. On January 15, 2019, a contingent liability was settled.
ii. On January 25, 2019 management disposed of a business
segment representing 40% of the total assets
iii. On January 31, 2019, management issued new common
stock.
The audit report date is February 2, 2019.
State clearly the type of subsequent event (Type I or Type II),
if any, and the required impact on the financial statements.
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1. A December 31 year end company, with a 30% tax rate, had accrued at December 31, 2019 a potential loss on a pending litigation of $2,000,000. On January 28, 2020, before the 2019 financial statements were approved for release, the litigation was settled for $1,500,000. How would this be reported and handled in the 2019 financial statements? Provide any entries that may be required 2. If a public company produces condensed interim financial statements in accordance with IAS 34,...
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The following are independent situations for which you will recommend an appropriate audit report Subsequent to the date of the financial statements as part of his post-balance sheet date audit procedures, a CPA learned that a recent fire caused heavy damage to one of a client's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. The financial statements and footnotes as prepared by the client did not disclose the loss caused by...
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Which of the following statements regarding the accrual method
of accounting is incorrect ?
A
A deposit that guarantees the customers payment of
amounts owed to the creditor is an advance payment.
B
An accrual basis taxpayer can deduct expenses owed to a
related cash basis taxpayer as soon as the expenses are
properly accrued even though the payment is not made
until a subsequent tax year.
C
Expenses are not deductible until all events have occurred
that determine the...
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Module 14 Homework ACCT 107 Part A In each of the following items, a significant subsequent event is described. Assume that you are expressing an opinion on Jensen Company's financial statements for the year ended December 31, 2018 and that you completed fieldwork on January 31, 2019. Choose between the following options: • Type 1 Event-Record and disclose • Type 2 Event - Disclose only Neither - Not reported in the financial statements Event A large account receivable from Barich...
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5-1 -2 -4 545. Multiple Choice Questions Select the best answer for each of the following questions. Explain the reasons for your selection a. Which of the following is not a financial statement assertion made by management? (1) Existence of recorded assets and liabilities. (2) Completeness of recorded assets and liabilities. (3) Valuation of assets and liabilities. (4) Effectiveness of internal control b. Which of the following business characteristics is not indicative of high inherent risk? (1) Operating results that...
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Which of the following would not require a departure from an
unqualified opinion?
Question 1 Which of the following would not require a departure from an unqualified opinion? Selected Answer: Statement of cash flows not included Answers: Statements are not in conformity with GAAP. Scope limitation. Statement of cash flows not included Related party transactions. Question 2 Which of the following is false regarding materiality and the audit opinion? Selected Answer: The level of materiality is mathematically calculated and therefore...
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Ouestion #3: For each of the following items, assume that Josh Feldstein, CPA, is expressing an opinion on Scomick Company's financial statements for the year ended December 31, 2015; that he completed fieldwork on January 21, 2016; and that he now is preparing his opinion to accompany the financial statements. In each item a subsequent event is described. This event was disclosed to the CPA either in connec- tion with his review of subsequent events or after the date on...
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Please I need help with these 2 multiple choice Q's. Thanks! "
ACCOUNTING"
Which of the following note disclosures relates to items that would be described as "not an arms length transaction". subsequent event transactions errors, fraud and illegal acts fair value measurements related party transactions 3 Which of the following is NOT true of comparative financial statements submitted annually to the SEC. Publicly traded companies should submit the annual 10K within 60 days of the fiscal year end...
Match each definition or example with the correct type of subsequent event. A flood damages a significant portion of the operating facility after year-end. During the audit, a customer with a large A/R balance at year-end declares bankruptcy. Type 1 Type 2 Additional evidence about conditions that existed at the balance sheet date. A lawsuit that was in progress as of year-end was settled shortly thereafter. Conditions that have come into existence after the balance sheet date.
1. A December 31 year end company, with a 30% tax rate, had accrued at December 31, 2019 a potential loss on a pending litigation of $2,000,000. On January 28, 2020, before the 2019 financial statements were approved for release, the litigation was settled for $1,500,000. How would this be reported and handled in the 2019 financial statements? Provide any entries that may be required 2. If a public company produces condensed interim financial statements in accordance with IAS 34,...
The following are independent situations for which you will recommend an appropriate audit report Subsequent to the date of the financial statements as part of his post-balance sheet date audit procedures, a CPA learned that a recent fire caused heavy damage to one of a client's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. The financial statements and footnotes as prepared by the client did not disclose the loss caused by...
Module 14 Homework ACCT 107 Part A In each of the following items, a significant subsequent event is described. Assume that you are expressing an opinion on Jensen Company's financial statements for the year ended December 31, 2018 and that you completed fieldwork on January 31, 2019. Choose between the following options: • Type 1 Event-Record and disclose • Type 2 Event - Disclose only Neither - Not reported in the financial statements Event A large account receivable from Barich...
5-1 -2 -4 545. Multiple Choice Questions Select the best answer for each of the following questions. Explain the reasons for your selection a. Which of the following is not a financial statement assertion made by management? (1) Existence of recorded assets and liabilities. (2) Completeness of recorded assets and liabilities. (3) Valuation of assets and liabilities. (4) Effectiveness of internal control b. Which of the following business characteristics is not indicative of high inherent risk? (1) Operating results that...
Which of the following would not require a departure from an
unqualified opinion?
Question 1 Which of the following would not require a departure from an unqualified opinion? Selected Answer: Statement of cash flows not included Answers: Statements are not in conformity with GAAP. Scope limitation. Statement of cash flows not included Related party transactions. Question 2 Which of the following is false regarding materiality and the audit opinion? Selected Answer: The level of materiality is mathematically calculated and therefore...
Ouestion #3: For each of the following items, assume that Josh Feldstein, CPA, is expressing an opinion on Scomick Company's financial statements for the year ended December 31, 2015; that he completed fieldwork on January 21, 2016; and that he now is preparing his opinion to accompany the financial statements. In each item a subsequent event is described. This event was disclosed to the CPA either in connec- tion with his review of subsequent events or after the date on...
j
Please I need help with these 2 multiple choice Q's. Thanks! "
ACCOUNTING"
Which of the following note disclosures relates to items that would be described as "not an arms length transaction". subsequent event transactions errors, fraud and illegal acts fair value measurements related party transactions 3 Which of the following is NOT true of comparative financial statements submitted annually to the SEC. Publicly traded companies should submit the annual 10K within 60 days of the fiscal year end...