How should the event be disclosed or recognized

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Problem 1: Nancarrow Corp. released its financial statements for the year ended December 31, Year 7, on March 15, Year 8. On February 1, Year 8, Nancarrow settled a long-standing lawsuit that resulted in a material loss. No liability for this circumstance had been accrued in the financial statements. How should this event be disclosed or recognized?

A. The event must be recognized in the financial statements.

B. The event should be disclosed, but the financial statements themselves need not be adjusted.

C. No disclosure or recognition is required.

D. The existing liability should be adjusted.

Reference no: EM132794585

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