Suppose the Environmental Protection Agency is in the process of investigating Ozone Ruination Limited for possible environmental damage but has not proposed a penalty as of December 31, 2011, the company’s fiscal year-end. Describe the two-step process involved in deciding how this unasserted assessment should be reported.
Answer to relevant QuestionsYou are the plaintiff in a lawsuit. Your legal counsel advises that your eventual victory is inevitable. “You will be awarded $12 million,” your attorney confidently asserts. Describe the appropriate accounting treatment.Life.com issued $10 million of commercial paper on April 1 on a nine-month note. Interest was discounted at issuance at a 6% discount rate. What is the effective interest rate on the commercial paper?Household Solutions manufactures kitchen storage products. During the year, the company became aware of potential costs due to (1) A possible product defect that is reasonably possible and can be reasonably estimated, (2) A ...Bavarian Bar and Grill opened for business in November 2011. During its first two months of operation, the restaurant sold gift certificates in various amounts totaling $5,200, mostly as Christmas presents. They are ...Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management December 2011 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a ...
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