The board of directors of the Geroulis Company has approved plans to acquire another company LO 7 Restriction of Retained Earnings during the coming year. The acquisition will cost approximately \(1,100,000\). The board took action to restrict retained earnings of the company in the amount of \(1,100,000\) on July \(17,20 \times 1\). On July 31 , the company had retained earnings of \(1,950,000\).

1. Show two ways the restriction on retained earnings can be disclosed.

2. What effect will the purchase have on retained earnings and future disclosures?