L19 Notes_Part_13 - The company had not previously recorded...

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Subsequent Discovery of Fact The fieldwork for the December 31, 2009, audit of Tucker's Christmas Trees, Inc. was finished February 28, 2010 and the completed financial statements, accompanied by the signed audit report, were mailed March 5, 2010. In each of the highly material independent events below, state the appropriate action (1 through 4) for the situation. The alternative actions are as follows: 1.Adjust the December 31,2009 financial statements. 2.Disclose the information in a footnote in the December 31, 2009 financial statements. 3.Request that the client recall the December 31, 2009 statements for revision. 4.No action is required.
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Subsequent Events & Discovery of Fact 17.On January 3, 2010, Tucker's Christmas Trees, Inc. received a shipment of raw materials from Canada. The materials had been ordered in October 2009 and shipped FOB shipping point November 2010. 18.On January 15, 2010, the company settled and paid a personal injury claim of a former employee as the result of an accident that occurred in March 2009.
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Unformatted text preview: The company had not previously recorded a liability for the claim. 19.On January 25, 2010, the company agreed to purchase for cash the outstanding stock of Porter Electrical Co. The acquisition is likely to double the sales volume of Tucker's Christmas Trees, Inc. 20.On February 1, 2010, a plant owned by Tucker's Christmas Trees, Inc. was damaged by a flood resulting in an uninsured loss of inventory. 21.On February 5, 2010, Tucker's Christmas Trees, Inc. issued and sold to the general public $2 million in convertible bonds. 22.On April 19, 2010, you discovered that a debtor of Tucker's Christmas Trees, Inc. went bankrupt on March 10, 2010. The sale had taken place December 6, 2009, but the amount appeared collectible at December 31, 2009 and March 5, 2010. 23.On June 20, 2010, you discovered that a debtor of Tucker's Christmas Trees, Inc. went bankrupt on January 15, 2010 due to a declining financial health. The...
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L19 Notes_Part_13 - The company had not previously recorded...

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