Chapter 3, Problem 3.8BYP

Judgment Case 3–8

Post fiscal year-end e vents

• LO3–4

The fiscal year-end for the Northwest Distribution Corporation is December 31. The company’s 2018 financial statements were issued on March 15, 2019. The following events occurred between December 31, 2018, and March 15, 2019.

1. On January 22, 2019, the company negotiated a major merger with Blandon Industries. The merger will be completed by the middle of 2019.

2. On February 3, 2019, Northwest negotiated a $10 million long-term note with the Credit Bank of Ohio. The amount of the note is material.

3. On February 25, 2019, a flood destroyed one of the company’s manufacturing plants causing $600,000 of uninsured damage.

Required:

Determine the appropriate treatment of each of these events in the 2018 financial statements of Northwest Distribution Corporation.