QUESTION 41 For each of the following situations indicate the proper disclosure of the company's financial statements. In the space provided provide one of the following answers: Record as a Liability Disclose in the footnotes Not recorded nor disclosed A company is sued because their product probably caused bodily injury to 100's of customers. Legal counsel has provided a reasonable estimate of the loss. O Record as a liability O Neither record or disclose

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Question 1 For each of the following scenarios, indicate whether in your opinion it is a violation of the HKICPA Code of Ethics. Specifically, for each scenario, choose one of the following options: (1) not likely to be a violation; (2) likely to be aviolation; or (3)clearly a violation. For each scenario, clearly explain your reasoning. 1.→Tong and Tong CPAS recently completed the audit of the Michaels Corporation and- issued an unqualified opinion on the financial statements. Subsequent to the issuance of the financial statem ents and auditor'sreport, the Securities and Futures Commission: (SFC) initiated an investigation into possible illegal acts engaged in by Michaels Corporation, andhas requesteda copy of all the auditing documentation prepared by: Tong and Tong. Michaels Corporation has contacted Tong and Tong and threatenedto: take legal action against the audit firm if the auditors provide the auditing documentation to the SFC. Michaelsmaintains that the information is…

Q#3: How is accidental loss of goods treated in final account in case: • Goods had not been insured or Goods have been insured and the insurance company has claims associated with it.