Subsequent Events The auditor is auditing nancial statements for the year ended December 31, 2009 and is completing the audit in early March 2010. The following situations have come to the auditor's attention: 1. On February 12, 2010, the client agreed to an out-of-court settlement of a property damage suit resulting from an accident caused by one of its delivery trucks. The accident occurred on November 20, 2009. An estimated loss of $30,000 was accrued in the 2009 nancial statements. The settlement was for $50,000. 2. Same facts as in part (I), except the accident occurred January 1, 2010 and no loss was accrued. 3. The client is a bank. A major commercial loan customer led for bankruptcy on February 26, 2010. The bankruptcy was caused by an adverse court decision on February 15, 2010 involving a product liability lawsuit initiated in 2009 arising from products sold in 2007. 4. The client purchased raw materials that were received just before year end. The purchase was recorded based on its estimated value. The invoice was not received until January 31, 2010, and the cost was substantially different than was estimated. 5. On February 2, 2010, the board of directors took the following actions: (a) Approved ofcers' salaries for 2010. (b) Approved the sale of a signicant bond issue. (c) Approved a new union contract containing increased wages and fringe benets for most of the employees. The empioyees had been on strike since January 2, 2010. 6. A major customer was killed in a boating accident on January 25, 2010, in Mexico. The customer had pledged his boat as collateral. The boat, which was destroyed in the accident, was not insured. The allowance for doubtful accounts is not adequate to cover the anticipated loss. Required For each of the preceding independent subsequent events (which are to be considered material): a. Explain whether the event is a Type I or II, along with your recommendation for disclosure (if any) to management. b. Describe how the auditor would have learned about each of these situations