Financial Report: For this part of the assessment, you will prepare a financial

Question

Financial Report: For this part of the assessment, you will prepare a financial report in response to a hypothetical scenario: A major global disaster (in this case an oil spill) has caused environmental damage and has affected global transportation as well. As the controller of your chosen company, you are tasked with providing a financial report to the board of directors addressing how this event will affect your company.

A. Analyze the effects of the global disaster on the financial statements of your chosen company using the financial information from your company.

B. Recommend strategies to address the effects of the disaster on your chosen company based on your analysis

Explanation / Answer

Ans A - The effects on the financial statements are:

The charges and claims or compensations to the affected parties to declared in the income statement as non-operating expenses.

Further charges from government for the damages done to the ecosystem which cannot be quantified.

Ans B -

Selling of assets if any for the settlement of claims or compensations.

Setting up of escrow or any other accounts for future payments to the affected parties.

Investing in future projects of the affected parties.

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