Concept of accounting recognition

Assignment Help Accounting Basics

Reference no: EM13133980

Lopez Corporation, a manufacturer of household paints, is preparing annual financial statements at December 31, 2008. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Lopez recall all cans of this paint sold in the last six months. The management of Lopez estimates that this recall would cost $800,000. What accounting recognition, if any, should be accorded this situation?

Choose one answer.

a. No recognition

b. Note disclosure only

c. Operating expense of $800,000 and liability of $800,000

d. Appropriation of retained earnings of $800,000

Reference no: EM13133980

Questions Cloud

Product scope and project scope : Describe two differences between Product Scope and Project Scope. Provide illustrations (real or imagined) of how a change to each could arise.

Probability to find fewer than twenty substandard welds : If Smith checks 300 of the 7500 welds completed that shift, what is the probability that he will find fewer than 20 substandard welds?

What is the company gross income for year : One client gave the company a computer with a retail price of $2,500 and a fair market value of $2,000 in exchange for accounting services. Based on these facts, what is the company's gross income for the year

How many moles of hydronium ions will be released : 10.00 mL of a solution containing 0.17 M NaCl and 0.23 M AlCl3 is introduced into a fully charged cation exchange column. How many moles of hydronium ions will be released by the column?

Concept of accounting recognition : The management of Lopez estimates that this recall would cost $800,000. What accounting recognition, if any, should be accorded this situation?

Describe some of the information a good ais : Describe some of the information a good AIS could have provided for this firm and that, if provided in a timely manner, could have helped avoid some of its problems.

What is the company gross income for the year : One client gave the company a computer with a retail price of $2,500 and a fair market value of $2,000 in exchange for accounting services. Based on these facts, what is the company's gross income for the year

Find the npv if reinvestment rate is given : The reinvestment rate for these funds is 3 percent. Anderson uses an 13 percent required return on this project. what is the NPV?

The advantage of online shopping : the advantage of online shopping

User Account

All Pages