Circumstances where an "emphasis of a matter" paragraph may be necessary include
A)an uncertainty relating to the future outcome of exceptional litigation or regulatory action
B)early application (where permitted)of a new accounting standard that has a pervasive effect on the financial statements after its effective date
C)a major catastrophe that has had,or continues to have,a significant effect on the entity's financial position
D)insignificant transactions with related parties
E)unusually frequent subsequent events
F)both A and B
G)both A and C
H)both D and E

Question

Quizplus · Accepted Answer

An "emphasis of a matter" paragraph may be necessary when there is an uncertainty related to the future outcome of exceptional litigation or regulatory action, or when there is a major catastrophe that has had or continues to have a significant effect on the entity's financial position. Both of these circumstances are covered by option G. Option B refers to the early application of a new accounting standard, which may lead to a significant change in the financial statements, but it does not necessarily require an emphasis of a matter paragraph. Option D refers to insignificant transactions with related parties, which would not typically require an emphasis of a matter paragraph. Option E refers to unusually frequent subsequent events, which may require disclosure but not necessarily an emphasis of a matter paragraph.

Circumstances Where an "Emphasis of a Matter" Paragraph May Be