Exercise 24-2
For each of the following subsequent (post-balance-sheet) events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose.
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Sr. No.
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Subsequent (Post-Balance-Sheet) Events
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| 1. | Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end. |
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| 2. | Introduction of a new product line. |
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| 3. | Loss of assembly plant due to fire. |
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| 4. | Sale of a significant portion of the company’s assets. |
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| 5. | Retirement of the company president. |
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| 6. | Prolonged employee strike. |
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| 7. | Loss of a significant customer. |
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| 8. | Issuance of a significant number of shares of common stock. |
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| 9. | Material loss on a year-end receivable because of a customer’s bankruptcy. |
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| 10. | Hiring of a new president. |
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| 11. | Settlement of prior year’s litigation against the company (no loss was accrued). |
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| 12. | Merger with another company of comparable size. |
