A client has a calendar year-end.Listed below are four events that occurred after December 31.Which of these subsequent events might result in adjustment of the December 31 financial statements?
A)adoption of accelerated depreciation methods
B)write-off of a substantial portion of inventory as obsolete
C)collection of 90% of the accounts receivable existing at December 31
D)sale of a major subsidiary

Question

Quizplus · Accepted Answer

The write-off of a substantial portion of inventory as obsolete would result in a decrease in the value of the inventory reported on the December 31 financial statements. This would require an adjustment to the financial statements to reflect the lower value of the inventory. The other events listed would not require adjustments to the December 31 financial statements.

A Client Has a Calendar Year-End