Answer:
1. In order to secure a bank loan of $200,00, David pleged as collateral certain fixed assets wth a net book value of $300,000. David applied for the loan December 18, 2017, and the bank approved the loan on January 8, 2018.
DISCLOSED ON THE NOTES
the company should disclose the fact that fixed assets were used as collateral for a bank loan.
2. On November 21, 2017, David initiated a lawsuit seeking $500,000 in damages from a firm that David claims infringed on its trademark. David's attorneys have stated that the chances of wining and of getting the $500,000 are excellent.
DISCLOSED ON THE NOTES
since the chance of winning are excellent, very likely, the lawsuit should be disclosed
3. On February 22, 2018, David issued bonds at an interest rate 2 percentage points above the LIBOR (London Interbank Offered Rate). This is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks.
REPORTED IN THE FINANCIAL STATEMENTS
this involves liabilities and expenses that must be reported
4. A warehouse containing a significant portion of David's inventory was destroyed by fire on January 30, 2018.
REPORTED IN THE FINANCIAL STATEMENTS
the loss has to be reported
5. A supplier to whom David owes $15,000 declared bankruptcy on February 3, 2018.
REPORTED IN THE FINANCIAL STATEMENTS
the $15,000 loss has to be reported
