Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 24 - Full Disclosure in Financial Reporting - Review and Practice - Brief Exercises - Page 1446: BE24-3

Answer

The settlement of the liability reduces the 2017 net income by \$10,000; thus, it is a recognized subsequent event. The flood-related loss does not impact the 2017 income because it transpired after the balance sheet date. This is a non-recognized subsequent event.

Work Step by Step

The settlement of the liability reduces the 2017 net income by \$10,000; thus, it is a recognized subsequent event. The flood-related loss does not impact the 2017 income because it transpired after the balance sheet date. This is a non-recognized subsequent event.
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