An unfavorable verdict

Assignment Help Accounting Basics
Reference no: EM13295683

a. As a result of uninsured accidents during the year, personal injury suits for $350,000 and $60,000 have been filed against the company. It is the judgment of XYZ Company's legal counsel that an unfavorable outcome is unlikely in the $60,000 case but that an unfavorable verdict approximating $250,000 will probably result in the $350,000 case.
b. ABC Credit Cards Inc is being sued for antitrust violations related to its credit card activities. The company's attorneys believe that it is probable that findings of antitrust violations will be sustained against the company. The attorneys' estimate of losses is from $15,000,000 to $30,000,000, with the most likely expected settlement to be around $25,000,000.
c. ABC Credit Cards Inc is being sued for antitrust violations related to its credit card activities. The company's attorneys believe that it is probable that findings of antitrust violations will be sustained against the company. The attorneys' best estimate of losses is from $15,000,000 to $30,000,000, with no amount within the range more likely than any other.
d. On December 31, 2014, High Tech, Inc. learned that its competitor had introduced a product using a software development over which High Tech has exclusive patent rights. High Tech filed suit and its attorneys felt, it was probable that the company should recover at least $500,000. The company's December 31, 2014 year-end financial statements were issued on March, 15, 2015.
e. At the end of its first year of operations, the Medina Company has a balance in accounts receivable of $1,350,000. Based on an aging of the accounts receivable, the company believes it probable that it will be unable to collect $50,000 of these receivables.
f. Chemco's chemical product division consisting of five plants is uninsurable because of the special risk of injury to employees and losses due to fire and explosion. The year 2014 is considered one of the safest (luckiest) in the division's history because no loss due to injury or casualty was suffered. Having suffered an average of three casualties a year during the rest of the past decade (ranging from $60,000 to $700,000), management is certain that next year the company will probably not be so fortunate.
Required:
For each situation, discuss how and whether the contingency should be reflected in the company's financial statements. If the contingency should be accrued, prepare the journal entry. If the company were following IFRS, would the answer be different on any of the situations described?

Reference no: EM13295683

Questions Cloud

Find how far from the gun does the other fragment land : A projectile is shot with initial velocity 20.0 m/s at launch angle ? = 60.0? up from horizontal. How far from the gun does the other fragment land
Ligon enterprises has prepared a production budget : Ligon Enterprises has prepared a production budget for October. Management has determined that the total required production for October is 800,000 units when an ending inventory of 10,000 units is desired and the beginning inventory is 6,000 unit..
Compute the mass of the glider : Glider A with mass 0.400 kg, gliding with a velocity of magnitude 0.50 m/s on a frictionless, horizontal air track, makes a perfectly elastic head-on collision with a glider B with mass, Find the mass of the glider B
How much energy is dissipated in the block during the impact : A 20.0 gram bullet is shot horizontally into a 2.00 kg block and quickly becomes imbedded in the block. How much energy is dissipated in the block during the impact
An unfavorable verdict : a. As a result of uninsured accidents during the year, personal injury suits for $350,000 and $60,000 have been filed against the company. It is the judgment of XYZ Company's legal counsel that an unfavorable outcome is unlikely in the $60,000 ..
What is one standard deviation : A project's coefficient of variation is 0.55. The project has a positive coefficient of correlation of 0.20. The expected value is $1,200. What is one standard deviation?
Find line voltage at the source with a balanced 3-phase load : A balanced 3-phase load takes 5.4 kW at 0.6 lagging power factor. If this load is connected through lines having 2 ohms resistance and 2ohms inductive reactance. Find the line voltage at the source. The line voltage at the load is 208 volts.
What must the coupon rate of the new bonds be : What must the coupon rate of the new bonds be in order for the issue to sell at par if interest is paid semiannually?
Regalia fashions has an incentive compensation plan : Regalia Fashions has an incentive compensation plan through which a division manager receives a bonus equal to 8% of the division's net income. Division income in 2013 before the bonus and income tax was $245,000. The tax rate is 30%. Calculate..

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Understanding of the necessary decisions

With a good understanding of the requirements document, an understanding of the necessary decisions, and a sketch of the worksheet, the next step is to ____.

  How are bond ratings determined

How are bond ratings determined?

  Sales and production budgeting

a) Prepare the companies sales budget and schedule of expected cash collections. b) Prepare the companies production budget fro the upcoming fiscal year

  How much taxable income in total

How much taxable income, in total, must the shareholders of the corporation report on their 2010 tax returns?

  False credit sale at the end of the year

If sales were overstated by recording a false credit sale at the end of the year, where could you find the false "dangling debit"?

  Price variance and quantity variance

Explain why the quantity purchased is used in computing the direct materials price variance, but the actual quantity consumed is used in computing the direct materials quantity variance.

  Broad strategies following by company

Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Assume you are opening a small food outlet across the street from your ..

  Recognize the related revenue

If customers experience problems between regularly scheduled visits, Rawl makes service calls at no additional charge. Instead of paying monthly, customers may pay an annual fee of $540 in advance. For a customer who pays the annual fee in advance..

  Finding useful life of equipment

Werner Chemical, Inc., leased a protein analyzer on September 30, 2013-Depreciation is recorded on a straight-line basis at the end of each fiscal year. The useful life of the equipment is five years.

  Making entries in the books of the company

All the debentures were fully subscribed and allotted. Application and Allotment money were received on 8th and 12th July1990 respectively. You are required to make entries in thebooks of the company.

  Should gillian and goelzer approve the standard as proposed

Mindful of these considerations, Gillian,Goelzer, and the other board memebers mulled over the options: Should they approve the standard as proposed Should they accommodate the critics Should they find a middle ground If so, what provisions should..

  Fixed assets and increased net working capital

Thompson's Jet Skis has operating cash flow of $218. Depreciation is $45 and interest paid is $35. A net total of $69 was paid on long-term debt. The firm spent $180 on fixed assets and increased net working capital by $38. What is the amount of t..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd