Homework Answers
10) (B). Because we should recognise the maximum loss in our books.
11) (C). Because we can know the actual lability before annual general meeting
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Use the following information to answer the next 2 questions, On November 5, 2018, a lawsuit...
Use the following information to answer the next__2__ questions. On November 5, 2018, a lawsuit was...
Use the following information to answer the next__2__ questions. On November 5, 2018, a lawsuit was filed against Vienna Company for $2,000,000 damages suffered in an October, 2018 explosion. Vienna's legal counsel says it is probable the company will lose the lawsuit, and estimates the loss to be between $500,000 and $1 million. Vienna's year-end is December 31, 2018, and its financial statements are issued March 15, 2019 10. In its December 31, 2018 balance sheet, what amount of contingent...
A customer filed a lawsuit against Delta Ltd in December 2018. The lawsuit was for costs and damages allegedly incurred...
A customer filed a lawsuit against Delta Ltd in December 2018. The lawsuit was for costs and damages allegedly incurred as a result of the failure of one of Delta Ltd's electrical products. The amount claimed was $3 million. Delta Ltd's lawyers have advised that the amount claimed by the customer is extortionate and that Delta has a good chance of winning the case. However, the lawyers have also advised that if Delta Ltd loses the case it is expected...
On November 5, 2020, a Dune Corporation truck was in an accident with an auto driven...
On November 5, 2020, a Dune Corporation truck was in an accident with an auto driven by R. Bell. Dune received notice on January 12, 2021, of a lawsuit for $210,000 in damages for personal injuries suffered by Bell. Dune Corporation's legal counsel believes it is probable that Bell will be awarded an estimated amount in the range between $60,000 and $135,000, and that $90,000 is a better estimate of potential liability than any other amount. Dune's accounting year ends...
5 Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below....
5
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern's fiscal year ends December 31, and the 2018 financial statements are issued on March 15, 2019. a. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2019, judgment was rendered against Eastern in the amount of $117 million plus interest, a total of $132 million. Eastern plans to appeal the judgment and is unable to predict...
2. The following selected transactions relate to the liabilities of Stanton Corporation for 2018. Stanton's fiscal...
2. The following selected transactions relate to the liabilities of Stanton Corporation for 2018. Stanton's fiscal year ends on December 31. (1) In May 2018, Stanton became involved in litigation. In December 2018. A judgment for $800,000 was assessed against Stanton by the court. Stanton is appealing the amount of the judgment. Attorneys for Stanton feel that it is probable that they can reduce the assessment by 50%. No entries have been made by Stanton pending completion of the appeal...
The 16-Bit Corporation, whose December 31, 2019 year-end financial statements were issued February 16, 2020, had...
The 16-Bit Corporation, whose December 31, 2019 year-end financial statements were issued February 16, 2020, had the following transactions. For each transaction, indicate the amount that 16-Bit would show as a current liability on its December 31, 2019 balance sheet under US GAAP. Indicate $ “0” if no amount would be shown as a current liability. On November 17, 2019, 16-Bit was awarded damages of $500,000 by a court related to a patent infringement lawsuit it had filed in 2016....
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2018 financial statements are issued on March 15, 2019. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2019, judgment was rendered against Eastern in the amount of $110 million plus interest, a total of $125 million. Eastern plans to appeal the judgment and is unable to predict its outcome...
Erismus is defending against a lawsuit in 2021. Erismus's management believes it is reasonably possible that...
Erismus is defending against a lawsuit in 2021. Erismus's management believes it is reasonably possible that the company will lose in court. If it loses, management believes that damages will eventually be $5,320,000, with a present value of $3,724,000. Erismus’s fiscal year ends on December 31. Financial statements are issued in March 2022. Erismus prepares its financial statements according to U.S. GAAP. Erismus should report a $______________ liability for the pending lawsuit on its balance sheet dated December 31, 2021.
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31 . Financial statements are issued in March 2022 . Erismus prepares its financial statements according to U.S. GAAP.Required:Indicate the amount of asset or liability that Erismus would record, and explain your answer.1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than \(50 / 50\) chance of eventually prevailing in court, and that if it loses,...
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on...
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31. Financial statements are issued in March 2022. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court,...
Use the following information to answer the next__2__ questions. On November 5, 2018, a lawsuit was filed against Vienna Company for $2,000,000 damages suffered in an October, 2018 explosion. Vienna's legal counsel says it is probable the company will lose the lawsuit, and estimates the loss to be between $500,000 and $1 million. Vienna's year-end is December 31, 2018, and its financial statements are issued March 15, 2019 10. In its December 31, 2018 balance sheet, what amount of contingent...
A customer filed a lawsuit against Delta Ltd in December 2018. The lawsuit was for costs and damages allegedly incurred as a result of the failure of one of Delta Ltd's electrical products. The amount claimed was $3 million. Delta Ltd's lawyers have advised that the amount claimed by the customer is extortionate and that Delta has a good chance of winning the case. However, the lawyers have also advised that if Delta Ltd loses the case it is expected...
On November 5, 2020, a Dune Corporation truck was in an accident with an auto driven by R. Bell. Dune received notice on January 12, 2021, of a lawsuit for $210,000 in damages for personal injuries suffered by Bell. Dune Corporation's legal counsel believes it is probable that Bell will be awarded an estimated amount in the range between $60,000 and $135,000, and that $90,000 is a better estimate of potential liability than any other amount. Dune's accounting year ends...
5
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern's fiscal year ends December 31, and the 2018 financial statements are issued on March 15, 2019. a. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2019, judgment was rendered against Eastern in the amount of $117 million plus interest, a total of $132 million. Eastern plans to appeal the judgment and is unable to predict...
2. The following selected transactions relate to the liabilities of Stanton Corporation for 2018. Stanton's fiscal year ends on December 31. (1) In May 2018, Stanton became involved in litigation. In December 2018. A judgment for $800,000 was assessed against Stanton by the court. Stanton is appealing the amount of the judgment. Attorneys for Stanton feel that it is probable that they can reduce the assessment by 50%. No entries have been made by Stanton pending completion of the appeal...
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31 . Financial statements are issued in March 2022 . Erismus prepares its financial statements according to U.S. GAAP.Required:Indicate the amount of asset or liability that Erismus would record, and explain your answer.1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than \(50 / 50\) chance of eventually prevailing in court, and that if it loses,...
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31. Financial statements are issued in March 2022. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court,...
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