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Polska Corporation, in preparation of its December 31, 2014, financial statements, is attempting to determine the proper accounting treatment for each of the following situations. 1. As a result of uninsured accidents during the year, personal injury suits for $362,000 and $62,200 have been filed against the company. It is the judgment of Polska’s legal counsel that an unfavorable outcome is unlikely in the $62,200 case but that an unfavorable verdict approximating $255,600 will probably result in the $362,000 case. 2. Polska Corporation owns a subsidiary in a foreign country that has a book value of $5,876,000 and an estimated fair value of $9,672,000. The foreign government has communicated to Polska its intention to expropriate the assets and business of all foreign investors. On the basis of settlements other firms have received from this same country, Polska expects to receive 30% of the fair value of its properties as final settlement. 3. Polska’s chemical product division consisting of five plants is uninsurable because of the special risk of injury to employees and losses due to fire and explosion. The year 2014 is considered one of the safest (luckiest) in the division’s history because no loss due to injury or casualty was suffered. Having suffered an average of three casualties a year during the rest of the past decade (ranging from $62,200 to $702,800), management is certain that next year the company will probably not be so fortunate. (a) Prepare the journal entries that should be recorded as of December 31, 2014, to recognize each of the situations above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
On the basis of the information on Under Armour's Consolidated Balance Sheet for December 31, 2014, what journal entry would be required to record (a) a two-for-one stock split, and (b) the Class C stock dividend?
Your client Anderson Company owes a note to the bank in the amount of $1,000,000 due February 1, 2015. The bank has agreed to refinance $500,000 of the note on a long term basis if the company can pay the other $500,000 by the due date. Explain the p..
"Measurement is arguably the most important concept in the discipline of accounting, since without measurement; there would be no need for accounting.
The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $10,000 in advertising costs. What is contribution margin per ticket?
On January 1, 2014, the Ferman Company ledger shows Equipment $37,900 and Accumulated Depreciation $14,124. The depreciation resulted from using the straight-line method with a useful life of 10 years and a salvage value of $2,590. On this date, the ..
Under the lower-of-cost-or-market rule, the cost of inventory is reduced if the market value falls below the initial cost of the inventory. Why not increase the cost of inventory if the market value is higher than the initial cost of the inventory?
American Food Services, Inc., leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2013. Prepare an amortization schedule for the four-year term of the lease. Prepare the..
How does this change affect the incentives for working? b. How might this change represent a trade-off between equality and efficiency?
Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. Calculate the gross margin for FIFO and LIFO method.
How much higher (or lower) would company’s first-year net income have been if absorption costing had been used rather than variable costing? Show computations.
The cash records of Downs Company show the following. For July: The June 30 bank reconciliation indicated that deposits in transit total $580. During July, the general ledger account Cash shows deposits of $16,900, but the bank statement indicates th..
Last year, Flynn Company reported a net income of $70,000 when sales totaled $520,000 and the contribution margin ratio was 40%. If fixed costs increase by $10,000 for the coming year, calculate the amount of sales revenue Flynn Company would need to..
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