Hi Please see the attached case question and let me know what do you think.

Questions 1) Why didn't financial institutions' financial statements communicate the full extent of their losses? 2) What are the disclosure requirements for related party transactions? How can properly disclosed related party transactions influence a reasonable investor? Case: http://www.nytimes.com/1992/04/09yregion/gm-missing-436-million-accuses-li-dealer-of-fraud.html Answers 1) Financial institutions' didn't financial statements communicate the full extent of their losses because. No losses were reported unless the savings and loans sold their loans. If depositors withdrew too much money, a savings and loan would be forced to liquidate part of its loan portfolio and recognize a loss. So in 1980, savings and loans raised the rates they paid to depositors sufficiently to avoid large net withdrawals, to prevent losses. 2) Disclosures required when related parties enter into transactions, disclosures must include: the names of the transacting related parties a description of the relationship between the parties a description of the transactions the amounts involved any other elements of the transactions necessary for an understanding of the accounts amounts due to or from related parties at the balance sheet date and provisions for doubtful debts due from such parties at that date amounts written off in the period in respect of debts due to or from related