Which of the following events in a subsequent period is an example of a type 1 subsequent event? A) issuance of long-term bonds B) settlement of warranties in excess of recorded amounts C) purchase of a business D) issuance of preferred stock E) casualty loss resulting from a flood

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Type 1 subsequent events are those that provide additional evidence about conditions that existed at the date of the balance sheet and affect the estimates inherent in the process of preparing financial statements. The settlement of warranties in excess of recorded amounts fits this description because it provides additional evidence about the company's liabilities as of the balance sheet date.

Which of the Following Events in a Subsequent Period Is