Analyze the following independent situations. Determine how each contingency should be treated. a. b. C. Weaver,...
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Analyze the following independent situations. Determine how each contingency should be treated. a. b. C. Weaver, Inc. is being sued by a former employee. Weaver believes that there is a remote chance that the employee will win. The employee is suing Weaver for damages of $40,000. Gulf Oil Refinery had a gas explosion on one of its oil rigs. Gulf believes it is likely that it will have to pay environmental clean-up costs and damages in the future due to the gas explosion. Gulf cannot estimate the amount of the damages. Lawson Enterprises estimates that it will have to pay $75,000 in warranty repairs next year. Describe the situation in a note to the financial statements. Do not disclose. Record an expense and a liability based on estimated amounts. Analyze the following independent situations. Determine how each contingency should be treated. a. b. C. Weaver, Inc. is being sued by a former employee. Weaver believes that there is a remote chance that the employee will win. The employee is suing Weaver for damages of $40,000. Gulf Oil Refinery had a gas explosion on one of its oil rigs. Gulf believes it is likely that it will have to pay environmental clean-up costs and damages in the future due to the gas explosion. Gulf cannot estimate the amount of the damages. Lawson Enterprises estimates that it will have to pay $75,000 in warranty repairs next year. Describe the situation in a note to the financial statements. Do not disclose. Record an expense and a liability based on estimated amounts.
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a The chance that the employee will win the case against the co... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting The Financial Chapters
ISBN: 978-0134486857
6th edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
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