Which of the Following Situations Would Require Adjustment to or Disclosure

question 46

Multiple Choice

Which of the following situations would require adjustment to or disclosure in the financial statements?

• A) A merger discussion
• B) The application for a patent on a new production process
• C) Discussions with a customer that could lead to a 40 percent increase in the client's sales
• D) The bankruptcy of a customer who regularly purchased 30 percent of the company's output

---

Definitions:

Japanese Construction Industry

A significant sector in Japan, known for its innovative construction techniques, earthquake-resistant buildings, and contribution to national GDP.

Bribe

An illegal or unethical payment made to influence someone's behavior in favor of the payer, often to gain some form of advantage.

Government Contracts

Government contracts are agreements between businesses and government entities for the provision of goods and services.

Herfindahl-Hirschman Index

A measure of market concentration used to evaluate the potential for anti-competitive behavior, calculated by summing the squares of the market shares of all firms within the industry.