Reference no: EM132877369

Question - In July 2020, a worker was injured at the Markel Industries Indiana plant, that was partially the result of the worker's negligence. The worker has sued Markel Industries for $1,000,000. Markel's Legal counsel believes it is reasonably possible that the outcome of the suit will be unfavorable, and that the settlement will cost the company in the range of $270,000 to $700,000. Legal counsel estimates that within this range, the most likely amount will be $350,000.

A suit for breach of contract seeking damages of $300,000 was filed against Fast Eddie's Hot Rod Publications Company, by an author who wrote a book on rebuilding an Oldsmobile 455 cubic inch high performance engine. The suit was filed on October 4, 2020. Fast Eddie's legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the award to the author is between $75,000 and $200,000. No amount within this range is a better estimate of potential damages than any other amount.

Montana Coffee Roasters is involved in a pending court case in which they have sued their supplier of organic coffee beans. Montana's lawyers believe it is probable that they will be awarded damages of $650,000.

Mastercraft Marine Paint Company, experienced a fire that destroyed their manufacturing facility. The loss is estimated at $815,000. The company has filed a claim with their insurance company, and hopes the entire loss, less a $25,000 deductible, will be covered.

Required - For each of the four separate independent situations above, explain what the proper accounting treatment should be, including any required disclosures in the financial statements.