college accounting

Project Description:

e 19-2a
how would the following be disclosed on w&h company’s financial statements? the balance sheet was dated december 31, 2010, and the financial statements were issued february 14, 2011
• 1. the internal revenue service has claimed that w&h company owes $450,000 of additional taxes for the first quarter of 2010; the claim was made in a suit filed on january 25, 2011. w&h company’s tax adviser estimates that the actual amount that will be paid is between $270,000 and $318,000.
• 2. on january 15, 2011, a fire destroyed one of w&h company’s warehouses. the warehouse had a net book value of $2,735,000 on the year-end balance sheet.

• 3. during 2010, a lawsuit was filed against w&h company that claimed $750,000 in punitive damages and $400,000 for personal injury, which the plaintiff alleges occurred when using one of w&h company’s products. the suit was not settled as of december 31, 2011, but the company’s attorney is convinced insurance would pay 75 percent of any award.
• 4. in late december, 2010 several dissident shareholders had informed the company that they intended to sue the w&h board of directors for $5,000,000 because the board had rejected a merger offer proposed by a major supplier. the company has indemnified the directors; thus, any judgment against the directors would be paid by the company. w&h company’s attorney felt any such suit would be without merit.
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