Which of the following situations would require adjustment to or disclosure in the financial statements?
A) A merger discussion.
B) The application for a patent on a new production process.
C) Discussions with a customer that could lead to a 40 percent increase in the client's sales if agreement is successful.
D) The bankruptcy of a customer who regularly purchased 30 percent of the company's output.

Question

Quizplus · Accepted Answer

The bankruptcy of a customer who regularly purchased 30 percent of the company's output would have a significant impact on the company's financial statements and would require disclosure. The other situations may not have a material impact on the financial statements and therefore would not require adjustment or disclosure.

Which of the Following Situations Would Require Adjustment to or Disclosure