Chapter 11, Problem 65EP

a.

1.

To determine

Explain the term subsequent event.

2.

To determine

Explain the two types of subsequent events. Also, examine the appropriate financial statements presentation of each type.

3.

To determine

Explain the procedure that should be performed to ascertain the existence of subsequent events.

b.

1.

To determine

Identify the essential elements of a contingent liability.

2.

To determine

State the manner through which the contingent liability should be disclosed in the financial statements.

c.

To determine

State the reason how a subsequent event may relate to a contingent liability. Also, provide an example in support of the answer.