For each of the following subsequent (post-balance-sheet) events, indicate whether a company should adjust the financial statements, disclose in notes to the financial statements, or neither adjust nor disclose. Subsequent (Post-Balance Sheet) Events Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end. 1. 2. Introduction of a new product line. Adjust the Financial Statements 3. Loss of assembly plant due to fire. Disclose in Notes to the Financial Statements 4. Sale of a significant portion of the company's assets. Neither Adjust nor Disclose . 5. Retirement of the company president 11. Settlement of prior year's litigation against the company (no loss was accrued). 12. Merger with another company of comparable size.