Subsequent Events

Do not adjust the Year 1 financial statements; disclose the nature of the fire and an estimate of its financial effect if material.

Write down the warehouse to zero in the Year 1 balance sheet because the loss is now known.

Recognize an impairment loss in Year 1 only if the fire occurred before the statements are available to be issued.

Accrue a contingent loss in Year 1 equal to the estimated uninsured amount and disclose the event.