Part 1
Contingency liability = $900,000
According to FASB, if it is possible to get better estimated from the range of expected loss then that amount is considered to be accrued and in case of no better estimate, the amount at the lowest end of the range is considered to be accrued whereas the amount at the highest end is to be disclosed. Hence, the liability of $900000 is reported by Salt-n-Pepa Inc. at December 31, 2017.
Part 2
Loss accrued = $5,000,000
The potential insurance recovery is considered as a gain contingency and gain contingency is not recorded until it is actually received.
Part 3
No contingency should be reported in the financial statements of Etheridge Inc.
The amount that will be received is going to be higher than the book value of the plant and thus it is considered a gain contingency. Gain contingency is not recorded until it is actually received. It is just disclosed.
Instructions Prepare all the entries that would be made relative to sales of soap powder and...
Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2017. E13-13 (103) (Contingencies) Presented below are three independent situations. Answer the question at the end of each situation. 1. During 2017, Salt-n-Pepa Inc, became involved in a tax dispute with the IRS. Salt-n-Pepa's attorneys have indicated that they believe it is probable that Salt-n-Pepa will lose this dispute. They also believe that Salt-n-Pepa will have to pay the IRS...
E13.13 (LO 3) (Contingencies) Presented below are three independent situations. Answer the question at the end of each situation. 1. During 2020, Salt-n-Pepa Inc. became involved in a tax dispute with the IRS. Salt-n-Pepa's attorneys have indicated that they believe it is probable that Salt-n-Pepa will lose this dispute. They also believe that Salt-n-Pepa will have to pay the IRS between $900,000 and $1,400,000. After the 2020 financial statements were issued, the case was settled with the IRS for $1,200,000. What...
. E13.13B (L0 3) (Contingencies) Presented below are three independent situations. Answer the question at the end of each situation. During 2020, Santiago Inc. became involved in a tax dispute with the IRS. Santiago’s attorneys have indicated that they believe it is probable that Santiago will lose this dispute. They also believe that Santiago will have to pay the IRS between $225,000 and $350,000. After the 2020 financial statements were issued, the case was settled with the IRS for $300,000....
Caterpillar Inc. 2017 2016 5 S 51,822 2,900 54,722 42,676 2,786 45,462 35,773 2,764 38,537 STATEMENT 1 Consolidated Results of Operations for the Years Ended December 31 Dollar is willions cat pershare dal Sales and revenues Sales of Machinery, Energy & Transportation Revenues of Financial Products Total sales and revenues Operating costs Cost of goods sold Selling, general and administrative expenses Research and development expenses Interest expense of Financial Products Goodwill impairment charge Other operating incomel expenses Total operating costs...