For each CONTINGENCY below for Easter Corp., determine the appropriate means of reporting each situation: 1)...

 

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For each CONTINGENCY below for Easter Corp., determine the appropriate means of reporting each situation: 1) reporting in financial statements; 2) disclosing in notes; 3) not reported. Briefly explain your reasoning. 1. Since August of 2017, Eastern has been involved in lawsuit resulting from a dispute with a customer over a 2016 transaction. At December 31, attorneys advised that it was probable that Eastern would lose $3 million in an unfavorable outcome. 2. Eastern filed suit against Western, Inc. in 2016 seeking damages for patent infringement. At December 31, 2017, legal counsel for Eastern believed that it was probable that Eastern would be successful against Western for an estimated amount in the range of $30 million to $50 million, with each amount in that range considered equally likely. 3. The EPA is in the process of investigating possible chemical leaks at two of Eastern's facilities, but has not proposed a deficiency assessment. Management feels an assessment is reasonably possible, and if an assessment is made an unfavorable settlement of up to $30 million is reasonably possible. For each CONTINGENCY below for Easter Corp., determine the appropriate means of reporting each situation: 1) reporting in financial statements; 2) disclosing in notes; 3) not reported. Briefly explain your reasoning. 1. Since August of 2017, Eastern has been involved in lawsuit resulting from a dispute with a customer over a 2016 transaction. At December 31, attorneys advised that it was probable that Eastern would lose $3 million in an unfavorable outcome. 2. Eastern filed suit against Western, Inc. in 2016 seeking damages for patent infringement. At December 31, 2017, legal counsel for Eastern believed that it was probable that Eastern would be successful against Western for an estimated amount in the range of $30 million to $50 million, with each amount in that range considered equally likely. 3. The EPA is in the process of investigating possible chemical leaks at two of Eastern's facilities, but has not proposed a deficiency assessment. Management feels an assessment is reasonably possible, and if an assessment is made an unfavorable settlement of up to $30 million is reasonably possible.

Answer rating: 100% (QA)

1 The lawsuit resulting from a dispute with a customer over a 2016 transaction should be reported in the financial statements This is because according to the given information attorneys have advised ... View the full answer