Compounder Pharmaceuticals Entity (CPE) has a year end of December 31. In January 20X1, CPE released a new drug that it claims is extremely effective against many types of cancer. This new drug is heralded as revolutionary. However, in December 20X1, several people are severely injured from taking the drug. Lawyers at CPE surmise that a lawsuit is likely. Later in January 20X2, a class-action lawsuit is formally brought against CPE. CPE's law team estimates that ₤20 million are likely to be awarded to the plaintiffs. The financial statements have not yet been authorized for issuance. Is this an adjusting or non-adjusting event? Why?

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The Answer of Compounder Pharmaceuticals Entity (CPE) has a year end of December 31. In January 20X1, CPE released a new drug that it claims is extremely effective against many types of cancer. This new drug is heralded as revolutionary. However, in December 20X1, several people are severely injured from taking the drug. Lawyers at CPE surmise that a lawsuit is likely. Later in January 20X2, a class-action lawsuit is formally brought against CPE. CPE's law team estimates that ₤20 million are likely to be awarded to the plaintiffs. The financial statements have not yet been authorized for issuance. Is this an adjusting or non-adjusting event? Why?

Compounder Pharmaceuticals Entity (CPE) Has a Year End of December