Ace Co$.$ settled litigation on February $1,$ Year $2,$ for an event that occurred during Year $1.$ An estimated

liability was determined as of December $31,$ Year $1.$ This estimate was significantly less than the final

settlement. The transaction is considered to be material. The financial statements for year$-$end Year $1$

have not been issued. How should the settlement be reported in Ace's year$-$end Year $1$ financial

statements?

A$.$ Disclosure only of the settlement.

B$.$ Only an accrual of the settlement.

C$.$ Neither a disclosure nor an accrual.

D$.$ Both a disclosure and an accrual.

Which of the following statements regarding the presentation guidelines for other comprehensive basis

of accounting $($OCBOA$)$ financial statements is correct?

A$.$ OCBOA financial statement disclosures are significantly less detailed than GAAP financial

statements disclosures.

B$.$ OCBOA financial statements should include financial statements equivalent to the accrual

basis balance sheet, income statement and statement of cash flows.

C$.$ Financial statement titles should differentiate OCBOA financial statements from accrual basis

financial statements.

D$.$ An explanation of changes in equity is not required because OCBOA financial statements do

not report equity interests.