Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 16, Problem 23GI
To determine
State the manner by which the loss occurred will be represented in the earnings per share.
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As a result of an allegedly defective equipment causing harm to an employee, an
entity is facing a lawsuit requesting damages. The entity's legal counsel estimates
that there is an approximately 60% possibility that the entity will lose the case
and that it will have to pay an amount between $100,000 and $200,000 with no
amount within such range being more likely than any other amount in the range.
How much should the entity record as a contingent loss, if any? (Select the best
answer.)
a. O $0
b. $60,000
c. O $100,000
d. O $150,000
XYZ Corp. is a manufacturer of generators. The domestic market for this products is currently not doing well, and therefore many entities in this business are switching to export. As per audited financial statements for the year ended December 31, 2021, the entity had a net loss of P 2,000,000. At December 31, 2021, its current assets aggregate to P 20,000,000 and current liabilities aggregate to P 25,000,000. Due to expected favorable changes in the government policies for this industry, the entity is projecting profits to the coming year. Furthermore, the shareholders of the entity have arranged alternative additional sources of financing for its expansion plans and to support its working capital requirements in the next 12 months.
Should ABC Corp. prepare its financial statements under the going concern assumption? Explain.
Accounting treatment for contingencies
Analyze the following independent situations.
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 or 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.
Determine how each contingency should be treated
Chapter 16 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 16 - What are the four important dates in regard to a...Ch. 16 - How does the ex-dividend date differ from the date...Ch. 16 - Prob. 3GICh. 16 - Prob. 4GICh. 16 - Prob. 5GICh. 16 - Prob. 6GICh. 16 - How does the accounting for a liquidating dividend...Ch. 16 - Prob. 8GICh. 16 - Prob. 9GICh. 16 - Prob. 10GI
Ch. 16 - What items might a corporation include in the...Ch. 16 - Prob. 12GICh. 16 - Prob. 13GICh. 16 - Prob. 14GICh. 16 - Prob. 15GICh. 16 - On what date are stock dividends and splits...Ch. 16 - Prob. 17GICh. 16 - What two earnings per share figures generally are...Ch. 16 - Prob. 19GICh. 16 - Prob. 20GICh. 16 - Prob. 21GICh. 16 - A company with potentially dilutive share options...Ch. 16 - Prob. 23GICh. 16 - Cash dividends on the 10 par value common stock of...Ch. 16 - A prior period adjustment should be reflected, net...Ch. 16 - Prince Corporations accounts provided the...Ch. 16 - Effective May 1, the shareholders of Baltimore...Ch. 16 - Kent Corporation was organized on January 1, 2014....Ch. 16 - For purposes of computing the weighted average...Ch. 16 - In determining basic earnings per share, dividends...Ch. 16 - Hyde Corporations capital structure at December...Ch. 16 - Iredell Company has 2,500,000 shares of common...Ch. 16 - Prob. 10MCCh. 16 - Prob. 1RECh. 16 - Prob. 2RECh. 16 - Prob. 3RECh. 16 - Use the same facts as in RE 16-3, but instead...Ch. 16 - Given the following current year information,...Ch. 16 - In Year 2, Adams Corporation discovered that it...Ch. 16 - Howard Corporal ion had 10,000 shares of common...Ch. 16 - Given the following year-end information for...Ch. 16 - Aiken Corporation has compensatory share options...Ch. 16 - Marlboro Corporation has 9% convertible preferred...Ch. 16 - Sarasota Corporation has 9% convertible bonds...Ch. 16 - Given the following year-end information, compute...Ch. 16 - Various Dividends Carlyon Company listed the...Ch. 16 - Dividends Andrews Company has 80,000 available to...Ch. 16 - Prob. 3ECh. 16 - Prob. 4ECh. 16 - Stock Dividend Comparison Although Oriole Company...Ch. 16 - Prior Period Adjustments Scobie Company began 2019...Ch. 16 - Prob. 7ECh. 16 - Prob. 8ECh. 16 - Prob. 9ECh. 16 - Shareholders Equity Herrera Manufacturing...Ch. 16 - Prob. 11ECh. 16 - Weighted Average Shares At the beginning of 2019,...Ch. 16 - Weighted Average Shares At the beginning of the...Ch. 16 - Earnings per Share The 2018 balance sheet for...Ch. 16 - Prob. 15ECh. 16 - Jumbo Corporation reported the following...Ch. 16 - Lucas Company reports net income of 5,125 for the...Ch. 16 - Monona Company reported net income of 29,975 for...Ch. 16 - Lyon Company shows the following condensed income...Ch. 16 - Extreme Company reported the following information...Ch. 16 - Mills Company had five convertible securities...Ch. 16 - Prob. 22ECh. 16 - Prob. 23ECh. 16 - Prob. 24ECh. 16 - Prob. 25ECh. 16 - Tama Companys capital structure consists of common...Ch. 16 - Percy Company has 15,000 shares of common stock...Ch. 16 - Prob. 28ECh. 16 - Keener Company has had 1,000 shares of 7%, 100 par...Ch. 16 - Otter Tail, Inc., began operations in January 2015...Ch. 16 - On January 1, 2019, Kittson Company had a retained...Ch. 16 - Prob. 4PCh. 16 - Alert Companys shareholders equity prior to any of...Ch. 16 - Prob. 6PCh. 16 - Oakwood Inc. is a public enterprise whose shares...Ch. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - Prob. 10PCh. 16 - Raun Company had the following equity items as of...Ch. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Gray Company lists the following shareholders...Ch. 16 - Included in the December 31, 2018, Jacobi Company...Ch. 16 - Prob. 16PCh. 16 - Graham Railways Inc. is evaluating its operations...Ch. 16 - Prob. 18PCh. 16 - Anoka Company reported the following selected...Ch. 16 - Winona Company began 2019 with 10,000 shares of 10...Ch. 16 - Waseca Company had 5 convertible securities...Ch. 16 - Roseau Company is preparing its annual earnings...Ch. 16 - Prob. 23PCh. 16 - Frost Company has accumulated the following...Ch. 16 - The controller of Red Lake Corporation has...Ch. 16 - Prob. 26PCh. 16 - Problems may be encountered in accounting for...Ch. 16 - Stock splits and stock dividends may be used by a...Ch. 16 - Earnings per share (EPS) is the most featured...Ch. 16 - The earnings per share data required of a company...Ch. 16 - Prob. 5CCh. 16 - Public enterprises are required to present...Ch. 16 - Prob. 7CCh. 16 - Ryan Company has as a goal that its earnings per...
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