ab Ltd is a manufacturing company that sells Gym equipment the audit of ab Ltd for the year ended 30 June 2018, the auditor lists the following items considered material for review by the engagement manager. 1. A $26,000 sale on 14 July 2018 for Gym equipment was included in the inventory at a cost of $35,000. 2. Bonds were issued on 16 August 2018in the amount of $2,000,000. 3. Machine was purchased on 31 July 2018 for the amount of $150,000. 4. A major customer filed for bankruptcy on 15 June 2018. 5. A legal action in the amount of $150 000 was settled on 6 August 2018 and is listed as a contingent liability on the financial statements. 6. A legal action was filed against ab Ltd for an injury to a customer's employee using a tool sold to them by ab Ltd. 7. AB has had discussions with a larger tool company for possible merger or sale.

Expected:

Which of the above items are most likely to be considered subsequent events?

What is the appropriate treatment of each of these seven items on 30 June 2020 financial statements assuming each one is material?