Question

REV Co. is reviewing the accounting and disclosure requirements for its significant guarantees, commitments, and contingencies, including litigation, as of December 31, year 3. The financial statements are expected to be available to be issued on February 10, year 4. Use the information in the exhibits above to determine the amount, if any, to recognize and whether disclosure is required in REV's financial statements as of and for the year ended December 31, year 3.

Answer 1

Answer:

REV Co. has made disclosure in notes to the financial statement section. The disclosures include the details about related party transaction which was carried out by the brother of Chief Operating Officer. It is ensured that the transaction was completed on arm's length.

Explanation:

Disclosures are mandatory for any company which is listed. The companies provide details of specific transactions in Notes to the Financial statements. These additional information provides details of transaction to the shareholders and removes any ambiguity in the transaction. The purpose of disclosures is to ensure the shareholders that the company has not incurred any fraudulent activity in certain transactions and all transactions are fair and complies with International Accounting Standards.