L19 Notes_Part_8 - the two agreements were signed should...

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Contingent LIabilities Linda Reeves, CPA, receives a telephone call from her client Lane Company. The company's controller states that the board of directors of Lane has entered into two contractual arrangements with Ted Forbes, the company's former president, who has recently retired. Under their agreement, Lane Company will pay the ex-president $7,000 per month for five years if he does not compete with the company during that time in a rival business. Under the other agreement, the company will pay the ex-president $5,000 per month for five years for such advisory services as the company may request from the ex-president. Lane's controller asks Reeves whether the balance sheet as of the date
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Unformatted text preview: the two agreements were signed should show $144,000 in current liabilities and $576,000 in long-term liabilities, or whether the two agreements should be disclosed in a contingencies note to the financial statements. How should Linda Reeves reply to the controller's questions? Explain Subsequent Events 12/31 2/14 2/28 balance sheet field work report date completion issue date period under audit subsequent events period Subsequent events are events or trans- actions having a material effect on the financial statements that occur after the balance sheet date but before field work completion....
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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L19 Notes_Part_8 - the two agreements were signed should...

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