For each of the following subsequent event financial statement disclosures, determine whether the treatment is proper. The fiscal year end is December 31 in each scenario. The financial statements are issued on February 7, 2016.
a. On January 21, 2016, the Company settled a product liability lawsuit for $ 4.5 million. The Company had previously recorded a liability for $ 3.0 million related to this lawsuit. No additional liability and loss are recorded on January 21, 2016.
b. On February 15, 2016, the Company announced that it had entered into an agreement to acquire the Snap Cracker Company for approximately $ 1.7 billion, which it expects to fund by issuing approximately $ 1.5 billion of long- term debt. The transaction is subject to customary conditions, including the receipt of regulatory approval. The Company expects the transaction to close in fall 2016. The company did not record a journal entry or prepare a footnote.
c. On February 2, 2016, an earthquake destroyed the Company’s pasta manufacturing facility in Italy, causing $ 2.6 million in losses that reduced its 2015 net income.