An example of a Type I subsequent event would be  A. a sudden change in senior management after the financial statement date B. a filing with the Securities and Exchange Commission (SEC) of an amended form 10K after the financial statement date C. the bankruptcy of a client’s customer after year-end as a result of poor financial condition that existed as of the balance sheet date D. the bankruptcy of a client’s customer after year-end as a result of poor financial condition that existed after the balance sheet date

What type of disclosure or accounting do you believe is necessary for the following items? a. Because of a general increase in the number of labor disputes and strikes, within and outside the industry, there is an increased likelihood that a company will suffer a costly strike in the near future. b. A company reports a material unusual and infrequent loss on the income statement. No other mention is made of this item in the annual report. C. A company expects to recover a substantial amount in connection with a pending refund claim for a prior year's taxes. Although the claim is being contested, counsel for the company has confirmed the client's expectation of recovery.

Suppose an accountant discovers that the company holds substantial amounts of inventory that are now obsolete and worthless. Should the accountant report the truth, write off the inventory as an asset, and take a loss on obsolete inventory in earnings? Suppose the accountant also knows that the company is already in distress. Should the accountant seek ways to avoid or delay recognizing inventory losses that will cause the company to report lower earnings and thereby experience a drop in stock price and potential bankruptcy? What if the accountant knows the company is growing quickly and generating healthy profits?

3. Consider the following two events: (a) a bank loses $1 billion from an unexpected lawsuit relating to its transactions with a counterparty and (b) an insurance company loses $1 billion because of an unexpected hurricane in Texas. Suppose that you have the same investment in shares issued by both the bank and the insurance company. Which loss are you more concerned about? a) The insurance company’s loss b) The bank lossc) Both lossesd) None of the losses

Problem 5-7 (AICPA Adapted) From inception of operations, Savvy Company carried no allowance for doubtful accounts. Uncollectible receivables were expensed as written off and recoveries were credited to income as collected. During the current year, management recognized that the accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful accounts was necessary. A policy was established to maintain an allowance for doubtful accounts based on historical bad debt loss percentage applied to year-end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Accounts written off Year Credit sales Recoveries 1,500,000 2,200,000 3,000,000 3,300,000 4,000,000 2016 15,000 40,000 50,000 65,000 88,000 2017 2,000 3,000 5,000 10,000 2018 2019 2020 Accounts receivable balances were P1,250,000 and P2,000,000 on January 1, 2020 and December 31, 2020,…