The Following Event Occurred After the Company's Year-End but Before

question 109

Essay

The following event occurred after the company's year-end but before the completion of the audit. For this subsequent event, determine whether the event:
•requires an adjustment to the year-end financial statements,
•requires note disclosure, or
•requires neither adjustment to recognized amounts nor disclosure.
A major client unexpectedly goes bankrupt and it is determined that you will get only 30% of the value of their account receivable as full and final settlement. (Justify your recommendation.)

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Definitions:

Met Safety Needs

Refers to the fulfillment of the second level of Maslow's hierarchy of needs, which includes security and protection from physical and emotional harm.

Satisfied Affiliation Needs

A psychological condition in which an individual's need for social relationships and connections with others is fulfilled.

Chain Migration

A term used in demography to describe the social process by which migrants from a particular town follow others from that town to a particular destination.

Resettlement Agency

An organization that assists refugees and asylum seekers in finding new homes and integrating into new communities.