Accounting standards require retroactive adjustment for stock splits

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  • #843129
    mashloum
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    I can not understand this question clearly, need your help!
    Which of the following material events occurring subsequent to the December 31, 20X5 balance sheet would not ordinarily result in an adjustment to the financial statements before they are issued on March 2, 20X6?
    Write-off of a receivable from a debtor who had suffered from deteriorating financial condition for the past 6 years. The debtor filed for bankruptcy on January 23, 20X6.
    Acquisition of a subsidiary on January 23, 20X6. Negotiations had begun in December of 20X5.
    Settlement of extended litigation on January 23, 20X6, in excess of the recorded year-end liability.
    A 3-for-5 reverse stock split consummated on January 23, 20X6.

    AUD - 81
    BEC - 88
    FAR - 77
    REG - 80
    mashloum
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  • #843141
    mashloum
    Participant

    Which of the following material events occurring subsequent to the December 31, 20X5 balance sheet would not ordinarily result in an adjustment to the financial statements before they are issued on March 2, 20X6?
    Write-off of a receivable from a debtor who had suffered from deteriorating financial condition for the past 6 years. The debtor filed for bankruptcy on January 23, 20X6.
    Acquisition of a subsidiary on January 23, 20X6. Negotiations had begun in December of 20X5.
    Settlement of extended litigation on January 23, 20X6, in excess of the recorded year-end liability.
    A 3-for-5 reverse stock split consummated on January 23, 20X6.

    This answer is correct because the condition (acquisition of a subsidiary) did not arise until after year-end. Footnote disclosure of this transaction, however, is necessary.
    but why the other are not?

    AUD - 81
    BEC - 88
    FAR - 77
    REG - 80
    mashloum
Viewing 1 replies (of 1 total)
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