Settlement of a lawsuit in January for a materially different amount than was accrued at December 31 calls for an adjustment to the financial statements.

Question

Quizplus · Accepted Answer

If the settlement of a lawsuit in January is for a materially different amount than what was accrued at December 31, it would require an adjustment to the financial statements because the accrued amount at year-end would no longer be accurate. This adjustment would ensure that the financial statements provide users with reliable and relevant information.

Settlement of a Lawsuit in January for a Materially Different