Reference no: EM133198311

In connection with your audit of the financial statements of Farm Equipment Manufacturing Corp. for the year ended December 31, your post-balance sheet audit procedures disclosed the following subsequent event items:

1. January 3: The Ontario Government approved constructions of an expressway. The plan will result in the expropriation of land owned by Farm Equipment Manufacturing Corp. Constructions will begin later next year. No estimate of the expropriation award is available

2. January 31: As a result of reduced sales, production workers went on strike. To date, the strike is unsettled was curtailed in mid-January and some workers were laid off. On February 5, all of the remaining

Required:

Assume that the above subsequent items came to your attention before completion of your audit work on February 15. For each of the above items:

a, Give the audit procedures, if any, that would have brought the item to your attention. Indicate other sources of information that may have revealed the item.

b. Discuss the disclosure that you would recommend for the item, listing all details. Indicate those, if any, that should not be disclosed. Give your reasons for recommending or not recommending their disclosure.