$17-7$ Disclosing Subsequent Events

Jason Hirsch, engagement partner for the December $31,2007,$ Flowmeter, Inc., financial statement audit, is aware that events and transactions that took place after December $31,$

$2007($but before he issues his report dated February $28,2008),$ may affect the company$$s financial statements. The following material events or transactions have come to Hirsch$$s attention.

$1.$ On January $3,2008,$ Flowmeter, Inc., received a shipment of raw materials from Canada. The materials had been ordered in October $2007,$ and shipped FOB shipping point in November $2007.$

$2,$ On January $15,2007,$ the company settled and paid a personal injury claim of a former employee as the result of an accident that occurred in March $2006.$ The company had not previously recorded a liability for the claim.

$3.$ On January $25,2008,$ the company agreed to purchase for cash the outstanding stock of Porter Electrical Co$.$ The acquisition is likely to double the sales volume of Flowmeter, Inc.

$4.$ On February $1,2008,$ a plant owned by Flowmeter, Inc., was damaged by a flood, resulting in an uninsured loss of inventory.

$5.$ On February $5,2008,$ Flowmcter, Inc., issued and sold to the general public $$2,000,000$ in convertible bonds.

Required: For each of the events or transactions, discuss audit procedures that should have brought the item to the auditor$$s attention, and the form if $($and reasons for$)$ disclosure in the financial statements.