Chp 4_ Financial Disclosure

Question 1

How should a loss of a long-standing lawsuit be disclosed or recognized when the event happened after the balance sheet end date but before issuance of the statements?

Answer 1

Settlement of a lawsuit is indicative of conditions existing at year end and calls for recognition in the statements.

Question 2

How should subsequent events be disclosed or recognized when the conditions existed AT the balance sheet date?

Answer 2

Subsequent events that provide additional evidence with the respect to conditions that existed at the balance sheet date, including the estimates inherent in preparing the financial statements, must be recognized in the financial statements of the year affected by the subsequent event.