Final answer:
Adjustments may be required for the client's financial statements for material subsequent events such as loss on the sale of a closely-held investment, loss of plant and equipment due to a fire, and retirement of bonds at a loss. Business combinations usually do not require such adjustments.
Step-by-step explanation:
Subsequent Events and Financial Statement Adjustment
Among the listed subsequent events, the following might require an adjustment to the client's financial statements:
- Loss on the sale of a closely-held investment: If the loss is material and provides more evidence about the value of the investment as of the balance sheet date, it may indicate an impairment that should be recognized in the financial statements.
- Loss of plant and equipment due to a fire: This event would typically be considered a Type I subsequent event, as it provides additional information about conditions that existed at the balance sheet date and would require an adjustment if the event is material.
- Retirement of bonds payable at a loss: If the bonds were retired subsequent to the balance sheet date but prior to the issuance of the financial statements, and if the loss is material, it may require adjustment or disclosure depending on the specifics of the situation.
On the other hand, a business combination with another company would not typically require an adjustment to the prior period's financial statements, as it is an event that occurs after the balance sheet date.