The Commonwealth of Virginia filed suit in October 2022 against Northern Timber Corporation, seeking civil penalties...

 

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The Commonwealth of Virginia filed suit in October 2022 against Northern Timber Corporation, seeking civil penalties and injunctive relief for violations of environmental laws regulating forest conservation. When the financial statements were issued in 2023, Northern had not reached a settlement with state authorities, but legal counsel advised Northern Timber that it was probable the ultimate settlement would be $1,750,000 in penalties. The following entry was recorded: General Journal Loss-litigation Liability-litigation Debit 1,750,000 Credit 1,750,000 Late in 2024, a settlement was reached with state authorities to pay a total of $1,200,000 to cover the cost of violations. Required: 1. Prepare any journal entry(s) related to the change. 2. Is Northern required to revise prior years' financial statements as a result of the change? 3. Is Northern required to provide a disclosure note to report the change? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare any journal entry(s) related to the change. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. The Commonwealth of Virginia filed suit in October 2022 against Northern Timber Corporation, seeking civil penalties and injunctive relief for violations of environmental laws regulating forest conservation. When the financial statements were issued in 2023, Northern had not reached a settlement with state authorities, but legal counsel advised Northern Timber that it was probable the ultimate settlement would be $1,750,000 in penalties. The following entry was recorded: General Journal Loss-litigation Liability-litigation Debit 1,750,000 Credit 1,750,000 Late in 2024, a settlement was reached with state authorities to pay a total of $1,200,000 to cover the cost of violations. Required: 1. Prepare any journal entry(s) related to the change. 2. Is Northern required to revise prior years' financial statements as a result of the change? 3. Is Northern required to provide a disclosure note to report the change? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare any journal entry(s) related to the change. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.