Classify the following transactions and economic events for Floral Ltd. (Floral) as commitments, subsequent events, or contingencies. Some may fit more than one classification. Indicate how each should be reflected in the December 31, 2014 financial statements and explain your reasoning.

In responding, consider the usefulness of the information to different stakeholders.

a. On January 15, 2015, Floral announced it had acquired a major competitor for cash and Floral shares.

b. In October 2013, Floral was sued for $5 million by a disgruntled former senior executive. The case is expected to go to trial in mid-2015.

c. In August 2014, Floral signed a three-year agreement with a customer to supply certain goods and services. The goods and services will be supplied at market prices at the time and the agreement can be cancelled by the customer with 90 days notice. The agreement will make the customer one of Floral’s largest customers.

d. In May 2014, Floral guaranteed a $1,000,000 bank loan made to Nokomis Inc., a company owned by one of Floral’s shareholders. Floral is responsible for paying the principal and any outstanding interest in the event that the company is unable to make its payments. On January 5, 2015, Nokomis Inc. filed for bankruptcy.