Exercise 13-26 (Algo) Contingency; company disclosure [LO13-5, 13-6] AgriBiz Inc. provides chemical, plastic, and agricultural products...

  

Transcribed Image Text:

Exercise 13-26 (Algo) Contingency; company disclosure [LO13-5, 13-6] AgriBiz Inc. provides chemical, plastic, and agricultural products and services to various consumer markets. The following excerpt is taken from the disclosure notes of AgriBiz's 2017 annual report: At December 31, 2017, the Company had accrued obligations of $1,329 million for probable environmental remediation and restoration costs, including $237 million for the remediation of Superfund sites. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets. This is management's best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two times that amount. Required: 1. Does the excerpt describe a loss contingency? 2. Under what conditions would AgriBiz accrue such a contingency? 3. What journal entry would AgriBiz use to record this amount of provision (loss)? Required: 1. Does the excerpt describe a loss contingency? 2. Under what conditions would AgriBiz accrue such a contingency? 3. What journal entry would AgriBiz use to record this amount of provision (loss)? Complete this question by entering your answers in the tabs below. Req 1 and 2 No Req 3 What journal entry would AgriBiz use to record this amount of provision (loss)? (Enter your answers in millions. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) General Journal 1 Answer is complete but not entirely correct. Event 1 Loss-environmental claims Liability environmental claims Debit 1,327,000,000 Credit 1,327,000,00 Exercise 13-26 (Algo) Contingency; company disclosure [LO13-5, 13-6] AgriBiz Inc. provides chemical, plastic, and agricultural products and services to various consumer markets. The following excerpt is taken from the disclosure notes of AgriBiz's 2017 annual report: At December 31, 2017, the Company had accrued obligations of $1,329 million for probable environmental remediation and restoration costs, including $237 million for the remediation of Superfund sites. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets. This is management's best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two times that amount. Required: 1. Does the excerpt describe a loss contingency? 2. Under what conditions would AgriBiz accrue such a contingency? 3. What journal entry would AgriBiz use to record this amount of provision (loss)? Required: 1. Does the excerpt describe a loss contingency? 2. Under what conditions would AgriBiz accrue such a contingency? 3. What journal entry would AgriBiz use to record this amount of provision (loss)? Complete this question by entering your answers in the tabs below. Req 1 and 2 No Req 3 What journal entry would AgriBiz use to record this amount of provision (loss)? (Enter your answers in millions. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) General Journal 1 Answer is complete but not entirely correct. Event 1 Loss-environmental claims Liability environmental claims Debit 1,327,000,000 Credit 1,327,000,00

Answer rating: 100% (QA)

Solution Requirement yes the Requirement 6 Requirement note describes AgriBia conside... View the full answer