Reference no: EM131217290
Eastern Chemical Company is involved with several situations that could lead to contingencies. Each is described below.
a. During 2017, Eastern became involved in a tax dispute with the IRS. Eastern’s attorneys have indicated that they believe it is probable that Eastern will lose this dispute. They also believe that Eastern will have to pay the IRS between $900,000 and $1,400,000. After the 2017 financial statements were issued, the case was settled with the IRS for $1,200,000.
b. On October 1, 2017, Eastern was identified as a potentially responsible party by the Environmental Protection Agency. Eastern’s management along with its counsel have concluded that it is probable that Eastern will be responsible for damages, and a reasonable estimate of these damages is $5,000,000. Eastern’s insurance policy of $9,000,000 has a deductible clause of $500,000.
c. Eastern had a manufacturing plant in Egypt, which was destroyed during the recent Arab uprising. It is not certain who will compensate Eastern for this destruction, but Eastern has been assured by governmental officials that it will receive a definite amount for this plant.
List The amount of the compensation will be less than the fair value of the plant, but more than its book value. Required
1. For each of the three situations, how should the contingency be reported in the financial statements of Eastern?
2. Prepare any necessary journal entries and disclosure notes.
|
Prepare an amortization schedule by the straight-line method
: On January 1, 2017, Crystal Corporation issued a $100,000 10-year bonds at 11%. Interest is paid annually on December 31. The bonds were sold for $94,349 and the yield is 12%. Prepare an amortization schedule that determines interest at the effective..
|
|
Write an essay about chinese culture
: Write an essay about Chinese culture, like what's the differences between Han dynasty and Qin dynasty.
|
|
What would be the amount of the firms total revenue
: At what price should this firm sell its product? What would be the amount of the firm's total revenue at the quantity and price identified in the prior two questions?
|
|
Marginal product of labor
: Suppose you have the following production function: Q=L^25 K^75, where Q is production, L is the amount of labor used in production, K is the amount of capital. The marginal product of labor is mathematically defined as: ?Q/?L. If K is fixed at 1..
|
|
Prepare any necessary journal entries and disclosure notes
: Eastern Chemical Company is involved with several situations that could lead to contingencies. Each is described below. During 2017, Eastern became involved in a tax dispute with the IRS. Eastern’s attorneys have indicated that they believe it is pro..
|
|
Financial account. practice final exam and group assig #2
: When a particular account receivable is determined to be uncollectible, the journal entry to write off the account reduces net income. Depreciation is the process of estimating a long-lived asset's current market value. An expenditure is capitalized ..
|
|
Gasoline equilibrium quantity and price
: Discuss the effects falling oil and gas prices on the gasoline equilibrium quantity and price; and, (b) what price do you expectregular gasoline will be in Pullman WA on October 15, 2015 and on December 15, 2015 and explain why.
|
|
Correct differential equation for the load amortization
: Load the Excel spread sheet, and use it to plot amortization tables for interest only, negative amortization, and positive amortization conditions. Extend the spread sheet to use difference equations for an R-C low pass filter. Write the correct diff..
|
|
Overstatement or understatement of net income
: Journalize the adjusting entries below at year-end December 31, XXXX. Please share your supporting calculations for the adjusting entries requiring computations. The unadjusted balance of the Supplies account is $2,200. Calculate the overall overstat..
|