Instructions: Indicate whether the event is either a Type I, Type II, is not necessary to pursue and why. Indicate what audit procedure(s), as the auditor, should be performed given the circumstance as described or determine if it is a Type I or Type II event.

Explain why you feel this is the correct action to take.Support your explanation with reference to the auditing standards as appropriate.

Where appropriate, indicate what the proposed journal entry would be and ensure that you add it to the Summary of Identified Misstatements Worksheet.ONLY include items where no additional audit procedures need to be performed.

Fiscal year ended Dec 31, 2019. Audit report will be dated Feb 12, 2020

Subsequent events

1)Shortly after the end of the fiscal year (Jan 20, 2020), a natural disaster struck one of the compressor stations along the pipeline, completely destroying the station. The station had a book value of $275,000.

2)On Jan 4, 2020 a landowner who operates a farm through which the pipeline runs telephoned the company's president to complain that his corn crop is smaller this season, and he believes it is due to noxious gas leaking from the pipeline. He is threatening to sue the company for lost revenue.

NOTE:

2019 2018

Long term assets

Property, plant, and equipment 1,111,106 1,167,128

Other long-term assets 13,143 14,884

Total long-term assets 1,124,249 1,182,013

Total assets 1,158,053 1,216,675