Contracts or agreements can sometimes create financial conti

Contracts or agreements can sometimes create financial contingencies for companies. Discuss what types of contractual obligations must be disclosed in great detail in the notes to the balance sheet and why you think these details should be disclosed.

Solution

The following four items should be disclosed mandatorily in the notes to balance sheet in great detail :

1.General debt obligations

2.lease contracts

3.pension arrangements and

4.stock option plans.

The reason for disclosing these contractual situations is that these commitments are of ;

1.long-term nature

2.Are often significant in amount and

3.Are very important to the company\'s well-being.