Reference no: EM13834738
1. Identify the three levels of contingent liabilities and the respective accounting treatments.
Long-Run Motors, Inc. manufactures durable automobiles with 3-year bumper-to-bumper warranties. During 2014 (the first year of operations), Long-Run sells 100,000 automobiles with the following expected future warranty claims:
|
Year
|
Expected cost of claims
|
Probability
|
|
|
$25,000
|
15%
|
|
2015
|
$75,000
|
50%
|
|
|
$150,000
|
35%
|
|
|
|
|
|
|
$40,000
|
25%
|
|
2016
|
$100,000
|
35%
|
|
|
$120,000
|
40%
|
|
|
|
|
|
|
$60,000
|
15%
|
|
2017
|
$120,000
|
40%
|
|
|
$150,000
|
45%
|
2. At December 31, 2014, why will Long-Run report a liability for warranty claims?
3. What will Long-run report as the total warranty liability (ignore current vs. non-current classification) at December 31, 2014 if the risk-adjusted discount rate is 10%? Assume Long-Run settles any claims at the end of the years (i.e., December 31).
4. In January 2014, ABC Inc. receives notice that a customer will be filing (but has not yet filed) a product liability lawsuit against the firm. If the plaintiff's injuries occurred during 2013, and ABC will issue the 2013 financial statements on February 28, 2014, will the 2013 balance sheet include a liability for injuries associated with the lawsuit? Why or why not?
5. GAAP requires the recognition of expected probable losses, and generally prohibits the recognition of expected probable gains. Why is GAAP requiring the recognition of the losses earlier than the gains?
|
Problem regarding the village of maxieville
: The data presented below were taken from the books and records of the Village of Maxieville. All amounts are in millions. The village encumbers all outlays. As is evident from the data, some goods and services that were ordered and encumbered h..
|
|
Calculate the maximum height the ball will reach
: calculate the maximum height the ball will reach
|
|
What are the sequence number source port number
: In the second segment sent from A to B, what are the sequence number, source port number and destination port number? If the first segment arrives before the second segment, in the acknowledgment of the first arriving segment, what is the acknowledgm..
|
|
How the use of ifrs is enforced within your chosen country
: Discuss whether and how the use of IFRS is enforced within your chosen country. Evaluate whether the firm's accounts are comparable with their key global competitors.
|
|
Levels of contingent liabilities
: 1. Identify the three levels of contingent liabilities and the respective accounting treatments.
|
|
Problem regarding the forten company
: Forten Company, a merchandiser, recently completed its calendar-year 2013 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on ..
|
|
Perform a financial analysis of wmt vs tgt
: Perform a FINANCIAL ANALYSIS of WMT vs. TGT: Create side-by-side LINE CHARTS with CAGRs for WMT vs. TGT for fiscal years 2007-2014 in SALES, STOCK PRICE, NET PROFITS.
|
|
Program that allows user to search internet account number
: Read, validate and store account number and internet usage for N customers - Calculate, store and display the cost for all customers and Calculate, store and display the cost for all customers
|
|
What are all possible values of the ack field
: What are the possible sets of sequence numbers inside the sender's window at time t? Justify your answer.What are all possible values of the ACK field in all possible messages currently propagating back to the sender at time t? Justify your answer.
|