Classify each of the following events as a commitment, a subsequent event or a contingency.Support your decisions.Some may fit more than one classification.For each one, indicate how it would be reflected in the company's financial statements.Assume a December 31 year-end for all companies; assume all amounts are material unless otherwise noted.
A) On November 15, a customer became ill after eating in one of the restaurants operated by the company.The customer is suing the company for lost wages and damages totalling $50,000.No other customers have complained to the company about similar problems, so the company's lawyers believe the claims are without merit.The amount of the claim is very small relative to the company's overall business.
B) A company guarantees a $2,000,000 loan of a subsidiary.They have been the guarantor for five years and have never had to act on their guarantee.
C) On September 30, the company renewed the lease on their office space for five years at a monthly payment of $20,000.
D) On July 1, the company entered into an agreement with its supplier to buy $500,000 worth of goods, based on prices in effect on that date, per year for the next five years.The company is pleased to have the supply assured over the next five years, although to date purchases from that supplier have never exceeded $400,000.E) On January 31, the company issued $5,000,000 in bonds.

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The Answer of Classify each of the following events as a commitment, a subsequent event or a contingency.Support your decisions.Some may fit more than one classification.For each one, indicate how it would be reflected in the company's financial statements.Assume a December 31 year-end for all companies; assume all amounts are material unless otherwise noted.
A) On November 15, a customer became ill after eating in one of the restaurants operated by the company.The customer is suing the company for lost wages and damages totalling $50,000.No other customers have complained to the company about similar problems, so the company's lawyers believe the claims are without merit.The amount of the claim is very small relative to the company's overall business.
B) A company guarantees a $2,000,000 loan of a subsidiary.They have been the guarantor for five years and have never had to act on their guarantee.
C) On September 30, the company renewed the lease on their office space for five years at a monthly payment of $20,000.
D) On July 1, the company entered into an agreement with its supplier to buy $500,000 worth of goods, based on prices in effect on that date, per year for the next five years.The company is pleased to have the supply assured over the next five years, although to date purchases from that supplier have never exceeded $400,000.E) On January 31, the company issued $5,000,000 in bonds.

Classify Each of the Following Events as a Commitment, a Subsequent