Van Rushing Hunting Goods' fiscal year ends on December 31. At the end of the 2011 fiscal year, the company
Through his attorney, one of Rushing's construction workers notified management on January 5, 2012, that he planned to sue the company for $1 million related to a work-site injury on December 20, 2011. As of December 31, 2011, management had been unaware of the injury, but reached an agreement on February 23, 2012, to settle the matter by paying the employee's medical bills of $75,000.
Rushing's financial statements were finalized on March 3, 2012.
1. What amount(s) if any, related to the situations described should Rushing report among current liabilities in its balance sheet at December 31, 2011? Why?
2. What amount(s) if any, related to the situations described should Rushing report among long-term liabilities in its balance sheet at December 31, 2011? Why?
3. How would your answers to requirements 1 and 2 differ if the settlement agreement had occurred on March 15, 2012, instead? Why?
4. How would your answers to requirements 1 and 2 differ if the work-site injury had occurred on January 3, 2012, instead? Why?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Question Posted: July 02, 2013 06:35:09