Agovernment contract completed during 2011 is subject to

Reference no: EM13591175

The items 1 through 6 below represent various commitments and contingencies of Martin Inc. at December 31, 2011 and events subsequent to December 31, 2011, but prior to the issuance of the 2011 financial statements. Martin Inc. is preparing its financial statements for the year ended December 31, 2011.

1. On December 1, 2011, Martin was awarded damages of $75,000 in a patent infringement suit it brought against a competitor. The defendant did not appeal the verdict, and payment was received in January 2012.

2. A former employee of Martin has brought a wrongful-dismissal suit against Martin. Martin's lawyers believe the suit to be without merit.

3. At December 31, 2011 Martin had outstanding purchase orders in the ordinary course of business for purchase of a raw material to be used in its manufacturing process. The market price is currently higher than the purchase price and is not anticipated to change within the next year.

4. A government contract completed during 2011 is subject to renegotiation. Although Martin estimates that it is reasonably possible that a refund of approximately $200,000-$300,000 may be required by the government, it does not wish to publicize this possibility.

5. Martin has been notified by a governmental agency that it will be held responsible for the cleanup of toxic materials at site where Martin formerly conducted operations. Martin estimates that it is probable that its share of remedial action will be approximately $500,000.

6. On January 5, 2012, Martin redeemed its outstanding bonds and issued new bonds with a lower rate of interest. The reacquisition price was in excess of the carrying amount of the bonds.

You have been asked by Martin Inc. to advice on the treatment of the above items for financial accounting and reporting purpose. Prepare a detailed report discussing the relevant FASB codifications how the above six items should be accrued, accrued and disclosed, disclosed only Or should neither be accrued nor disclosed.

Reference no: EM13591175

Questions Cloud

Last year the house of orange had sales of 826650 net : last year the house of orange had sales of 826650 net operating income of 81000 and operating assets of 84000 at the

Dawns new car has a fmv of 20000 and it weighs 3000 pounds : dawns new car has a fmv of 20000 and it weighs 3000 pounds. the county also assessed a property tax on the car. the tax

Uing your answers to the previous part find the following : a write the following in polar form z rcos ? i sin ? r cis ?i 1 iii 1 v3iiii 3v3 3ib using your answers to the

On january 1 2013 wellburn corporation leased an asset from : on january 1 2013 wellburn corporation leased an asset from tabitha company. the asset originally cost tabitha 390000.

Agovernment contract completed during 2011 is subject to : the items 1 through 6 below represent various commitments and contingencies of martin inc. at december 31 2011 and

Xyz company leased equipment to west corporation under a : xyz company leased equipment to west corporation under a lease agreement that qualifies as a capital lease to west but

Explain how the procedure for using a valuation model to : explain how the procedure for using a valuation model to infer market expectations about a companys future growth

Xsylvester files as a single taxpayer during 2013 and : xsylvester files as a single taxpayer during 2013 and claims one personal exemption. he itemizes deductions for regular

Sue the corporate controller has thus far been impressed : sue the corporate controller has thus far been impressed with your performance at the charlotte plant. she thinks it is

User Account

All Pages