In many cases, there will be a period of time between the transaction closing date and the date of the next fiscal year-end. In our case, this is 2 months. We need to record what happens between the closing date and next fiscal year-end, so we create a “stub period” to record financial results during this time. We calculate income statement items for the stub period by multiplying the percentage of the current fiscal year remaining by the full fiscal year results.
