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.
The date of the audit report is the date through which all transactions that may have an effect on the prior year should be investigated.
For the estimated liability recorded at $160,000 at year end that is no longer an ...
In a 166 word response, each question is carefully answered.