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Evade

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1. As of December 31, 2011, what amount, if any, of sales taxes due should be recognized in eVade’s financial statements?
According to ASC 450-20-25-6, after the date of an entity's financial statements but before those financial statements are issued or are available to be issued, information may become available indicating that an asset was impaired or a liability was incurred after the date of the financial statements or that there is at least a reasonable possibility that an asset was impaired or a liability was incurred after that date. The information may relate to a loss contingency that existed at the date of the financial statements. On the other hand, the information may relate to a loss contingency that did not exist at the date of the financial statements. Since the risk of detection is not probable, there shouldn’t be any sales tax recognized in the December 31, 2011 financial statements. However, the loss contingency should be disclosed in the notes to the financial statements in the amount of $60,000,000.

2. What effect, if any, does eVade’s decision to participate in the tax amnesty program have on the amount recognized as of March 31, 2012?
According to ASC 250-10-50-9, when financial statements for a single period only are presented, this disclosure shall indicate the effects of such restatement on the balance of retained earnings at the beginning of the period and on the net income of the next preceding period. When there are more than one financial statements presented for the period, the disclosure shall include the effects for each of the periods included in the statements. Such disclosures shall include the amounts of income tax applicable to the prior period adjustments. Disclosure of restatements in annual reports issued after the first such post-revision disclosure would ordinarily not be required. Therefore, the participation in the

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