Streatham Steel has been a long-time partner of Croyden Foundry, located in nearby Thornton Heath, England. In late February, the Streatham officially acquired Croyden Foundry. The new company is named Streatham-Croyden Foundries. The companies have been secretly working toward this merger since July of the previous year. Neither company has authorized the issuance of financial statements and both companies have a December 31 year end. They should report as a consolidated entity (an adjusting event).

Question

Quizplus · Accepted Answer

The acquisition of Croyden Foundry by Streatham Steel is a significant event that occurred after the year-end of both companies. Since the merger was finalized after the year-end, it is considered a non-adjusting event for the financial statements of the period ending December 31. Therefore, they would not report as a consolidated entity for that fiscal year's financial statements.

Streatham Steel Has Been a Long-Time Partner of Croyden Foundry