In connection with your audit of the financial statements of Farm Equipment Manufacturing Corp. for the year ended December 31,

your post-balance sheet, audit procedures disclosed the following subsequent event items:

1. January 3: The Ontario Government approved the mega project development of the Lakeshore business/housing corridor. The plan will result in the expropriation of land owned by Farm Equipment Manufacturing Corp. Constructions will begin later next year. No estimate of the expropriation award is available.

2. January 31: As a result of reduced sales, production was curtailed in mid-January and some workers were laid off. On February 15, all of the remaining workers went on strike. To date, the strike is unsettled.

Required:

a. Give the audit procedures, if any, that would have brought the item to your attention. Indicate other sources of information that may have revealed the item.

b. Discuss the disclosure that you would recommend for the item, listing all details. Indicate those, if any, that should not be disclosed. Give your reasons for recommending or not recommending their disclosure.