Changes to Net Income for Linden Corporation for year ended
Linden Corporation is preparing its December 31, 2010, financial statements. Two events that occurred between December 31, 2010, and March 10, 2011, when the statements were issued, are described below.
A liability, estimated at $160,000 at December 31, 2010, was settled on February 26, 2011, at $170,000.
A flood loss of $80,000 occurred on March 1, 2011.
What effect do these subsequent events have on 2010 net income? (If there is no impact select not change and 0 for the amount.)
Net income will increase/decrease/not change by $------- as a result of the adjustment of the liability.
Net income will increase/decrease/not change by $------------ as a result of the adjustment of the flood loss.
In a 166 word response, each question is carefully answered.
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