Is Share Price Influenced by Netting Passed Adjustments Against Unexpected Gains? One year after Beldon Company management
Question:
Is Share Price Influenced by Netting Passed Adjustments Against Unexpected Gains? One year after Beldon Company management waived audit adjustments aggregating \(\$ 1.5\) million, management unexpectedly realizes \(\$ 1.5\) million in gains on the disposition of assets used to produce products sold in noncore markets. Beldon's CFO, recalling the audit partners' spirited defense of prior-year proposed (but passed) audit adjustments, nets the \(\$ 1.5\) million unexpected gains against the audit firm's prior-year audit adjustments. Management does not disclose the netting in Beldon's financial statements.
Required: Given that the adjustments were judged immaterial in the prior year, does netting current unexpected gains against prior year adjustments warrant disclosure in the current year?
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