For each of the following subsequent (post-balance-sheet) events, indicate whether a company should adjust the financial...

For each of the following subsequent (post-balance-sheet) events, indicate whether a company should adjust the financial statements, disclose in notes to the financial statements, or neither adjust nor disclose.

Sr. No. Subsequent (Post-Balance-Sheet) Events
1. Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
2. Introduction of a new product line.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
3. Loss of assembly plant due to fire.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
4. Sale of a significant portion of the company’s assets.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
5. Retirement of the company president.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
6. Prolonged employee strike.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
7. Loss of a significant customer.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
8. Issuance of a significant number of shares of common stock.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
9. Material loss on a year-end receivable because of a customer’s bankruptcy.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
10. Hiring of a new president.

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
11. Settlement of prior year’s litigation against the company (no loss was accrued).

Adjust the Financial Statements
Disclose in Notes to the Financial Statements
Neither Adjust nor Disclose.
12. Merger with another company of comparable size.

Solutions

Expert Solution

Answer:-

1	Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end	Adjust the Financial Statements
2	Introduction of a new product line	Neither adjust nor disclose
3	Loss of assembly plant due to fire	Disclose in notes to the financial statements
4	Sale of a significant portion of the company’s assets	Disclose in notes to the financial statements
5	Retirement of the company president	Neither adjust nor disclose
6	Prolonged employee strike	Neither adjust nor disclose
7	Loss of a significant customer	Neither adjust nor disclose
8	Issuance of a significant number of shares of common stock	Disclose in notes to the financial statements
9	Material loss on a year-end receivable because of a customer’s bankruptcy	Adjust the Financial Statements
10	Hiring of a new president	Neither adjust nor disclose
11	Settlement of prior year’s litigation against the company (no loss was accrued)	Adjust the Financial Statements
12	Merger with another company of comparable size	Disclose in notes to the financial statements

ekkarill92 answered 1 year ago

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