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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Why is it necessary for a company to disclose subsequent events? What kinds of subsequent events are recognized in the company’s financial statements, and what kinds are disclosed in a note?

To determine

State the necessity of a company to disclose subsequent events, explain the kinds of subsequent events recognized and explain the kinds of subsequent events disclosed in a note.

Explanation

Necessity of a company to disclose Subsequent events:

A subsequent event occurs between the date of company’s’ balance sheet and the date at which the annual report is issued. Company does not issue annual report for a period of several months or weeks after the end of an accounting period. During this time, there is a possibility for certain important business transactions or events to happen and if these are not recorded in the company’s’ annual report, then it will lead to misleading...

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