Shortly After Year-End,Allen Corporation Was Informed of the Bankruptcy of Quest.Allen

question 65

Multiple Choice

Shortly after year-end,Allen Corporation was informed of the bankruptcy of Quest.Allen Corporation showed a receivable of $20,000 (a material amount) due from Quest as of year-end-none of which seems recoverable.The receivable had been questionable for some time as Quest had been experiencing financial difficulties for the past several years.Yet,Quest's bankruptcy did not occur until after Allen Corporation's year-end.Under these circumstances:  

$\quad$ $\quad$ $\quad$ $\quad$$\begin{array}{lll}\text { The financial } & \text { The event requires financial } & \text { The auditor's report should be }\\\text { statements should be } & \text { statement disclosure, but no } & \text { modified for a lack of }\\ \text {adiusted } & \text { adjustment } & \text { consistency}\\\end{array}$
A- $\begin{array}{lll}\text { Yes } &\quad\quad\quad\quad\quad\quad\quad\quad\quad \quad \text { No } & \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { No } \\\end{array}$
B- $\begin{array}{lll}\text { Yes } &\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text { No } & \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Yes } \\\end{array}$
C- $\begin{array}{lll}\text { No } &\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text { Yes } &\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text { Yes } \\\end{array}$
D- $\begin{array}{lll}\text { No } &\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text { Yes } & \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { No }\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D