Re: Accounting Changes and Error Corrections

Date: March $23,$ Year $5$

Attachment$($s$)$: Draft Unadjusted Balance Sheet and Income Statement, Years $4$ and $3$

For your information and review in advance of our upcoming meeting, I am providing a copy of the company's draft unadjusted balance sheet and draft unadjusted income statement for Years $4$ and $3,$ along with a summary below of the classification and impact of key accounting entries identified during Year $4,$ including those we believe to be accounting changes and error corrections we will need to record in the unadjusted financials. At our meeting, I would like to discuss your feedback so we can make adjustments before giving the unaudited financial statements to JRM CPAs, who will be on$-$site for our annual audit April $3.$ B$$arc Acquisition: $$ne acquisition $$ biarc corp. was approved two weeks ago at a cost OT $\backslash (\backslash$$ $1,300,000\backslash ).$ Because this is a change in reporting entity, we will adjust Years $4$ and $3$ when we issue our financial statements.

Choose an option below:

$[$Original text$]$ Because this is a change in reporting entity, we will adjust Years $4$ and $3$ when we issue our financial statements.

Because this is a change in reporting entity and the transaction is known prior to the issuance of the Year $4$ financial statements, we will adjust Year $4$ financial statements.

The acquisition results in a change in the reporting entity in Year $5$ and will be disclosed as a subsequent event in the footnotes to the financial statements for Year $4$; however, there is no other impact to Year $4$ financials because the acquisition occurred after the current reporting period.