Cola Corporation issued its financial statements for the year ended
December 31, 2014, on February 25, 2015. The following events took place early in 2015.
(a) On January 29, the company purchased 50,000 shares of its $1 par value common stock for $23 per share.
(b) On February 15, Cola determined after negotiations with the other party in a lawsuit that Cola should pay $500,000. At December 31, 2014, a litigation liability was recorded at $200,000.
Instructions
Discuss how the preceding post-balance-sheet events should be reflected in the 2014 financial statements.