Brackenridge Corporation had several material events occur subsequent to the December 31, 20X8 balance sheet. First, there was a write-off of an accounts receivable from a debtor who had suffered from deteriorating financial conditions for the past six years. The debtor filed for bankruptcy on January 23, 20X9. Second, the company acquired a subsidiary on January 23, 20X9. Negotiations had begun in December of 20X8. Third, there was a settlement of extended litigation on January 23, 20X9. The amount of the settlement was in excess of the recorded year-end liability. Fourth, a 3-for-5 reverse stock split was consummated on January 23, 20X9.

You have been asked to consider each of the above material events and determine what impact, if any, they would have on the financial statements, which will be issued on March 2, 20X9.

Required:

Describe subsequent events, types of subsequent events and disclosure requirements. Identify the issues in the case and explain the impact. 

Answer rating: 100% (QA)

Subsequent events are events that occur after the balance sheet date but before the financial statements are issued These events may have an impact on the financial statements and therefore must be di... View the full answer