A company spills chemicals onto Russian land, causing damage that will cost $7million to clean. There is no environmental legislation but the companyy has clear green policies on its website. What are the effects of this on the Financial Statement of the company in the current year?
Q: Penco Ltd’s board of directors are looking into expanding the company’s business operations. Before…
A: Here the situation is Board of directors should taken the decision to invest $ 5M of company fund…
Q: Production at the Paint Company’s factory was halted for one day when a truck carrying dye used in…
A: Audit opinion is provided by the auditor when he audits or verifies the financial statement of the…
Q: In a recent year, an oil refinery in Texas City, Texas, on the Houston Ship Channel exploded. The…
A: Introduction: A cost is an expense incurred in the production or sale of a product or the…
Q: On September 14, 2020, a typhoon damaged a warehouse of TULIP Corporation. The entire company and…
A: Particulars Amount($) Collection of accounts receivables 4,230,000 Add: Ending accounts…
Q: The assistant financial controller of the Negril Group(NG), a public listed company, has identified…
A: Step 1 Impairment refers to the reduction in the value of asset due to negative change in the…
Q: Wildhorse Company purchased land and a building on January 1, 2022. Management’s best estimate of…
A: Depreciation is the allocation of cost of asset over the useful life of asset. It can be charged by…
Q: The Tenth National Bank had taken possession of a shopping mall in foreclosure of a mortgage. When…
A: PLEASE LIKE THE ANSWER, YOUR RESPONSE MATTERS The asbestos problem was clearly overseen by the…
Q: Accounting treatment for contingencies Analyze the following independent situations. Weaver, Inc.…
A: Contingent liability: It is a potential liability of a company that depends on a future event. It…
Q: Research Problem 1. Gray Chemical Company manufactured pesticides that were toxic. Over the course…
A: When the government imposed the fine then the liability to be paid for the company because if the…
Q: a. How much should the copy right be initially recognized?
A: the legal cost that company paid $15 million for copyrights of that singer's recordings option (a).…
Q: BEAST COMPANY is involved in the generation and distribution of electricity. Management is reviewing…
A: All assets of the business loses their value over the period of asset's life. For that depreciation…
Q: Raj Ltd.is a new company that was established on 1st January, 2020 to oversee the production of…
A: SOLUTION- Equity shares are the shares which represent the ownership of the shareholders in the…
Q: Which of the following gains or losses would Organic Foods account for as unusual and/or infrequent?…
A: Definition:
Q: PILAK Mining Company has a copper mine in Marinduque. The company is subject to the pronouncements…
A: Journal: It is the first step of recording financial transactions. It is used to prepare the…
Q: Charlie Brown, controller for Kelly Corporation, is preparing the company's income statement at…
A: Answer a: The ethical issues involved in the given case for Charlie Brown are: Integrity and…
Q: Company X incurred the following transactions in the current year. For each transaction, explain the…
A: Income tax means the charge or levy on the income earned which was collected by central government…
Q: Bell International estimates that a $10 million loss will occur if a foreign government expropriates…
A: Contingent Liability Contingent liability is one form of liability that arises based on a…
Q: Raj Ltd.is a new company that was established on 1st January, 2020 to oversee the production of…
A: SOLUTION- Equity shares are the shares which represent the ownership of the shareholders in the…
Q: A company purchased a building twenty years ago for Php1,500,000. The building currently has an…
A: Accounting principles means those set of standards which is followed while preparing the books of…
Q: Consider yourself the financial controller of Alpha. The managing director, who is not an…
A: IAS 16 describes as principles for recognizing property, plant, and equipment as assets, measuring…
Q: A company purchased a commercial dishwasher by paying cash of $4,800. The dishwasher's fair value on…
A: Dishwasher cost = Purchase price + Expense incurred on its transportation and installation fee
Q: The Spinach Corporation just purchased an expensive piece of equipment. Assume that the firm planned…
A: The increase in depreciation period from 5 years to 7 years would mean that the depreciation amount…
Q: If the company decides to purchase the new equipment for Larson, a mistake has been made somewhere,…
A: Depreciation: It refers to gradual fall in the value of the asset due to its normal usage, wear and…
Q: A mentally deranged employee, Mr. Arson, put a torch to a factory on February 20, 2018. The…
A: Cost Sheet: The copmonents of cost can be presented in the form of statement known as Cost Sheet.…
Q: manure industrial company wants to move to England County. A 20-year-old report from a sacked…
A:
Q: At the end of 2021, Magilke is evaluating the results of the instructional business. Due to fierce…
A: Impairment: A impairment loss happens while the conveying measure of a resource is more prominent…
Q: River Textile Mill was inspected by OSHA and found to be in violation of a number of safety…
A: The answer has been mentioned below.
Q: In January, 2022, Harmony Inc. has the following expenditures related to manufacturing a new…
A: In manufacturing industries, the most commonly used fixed asset are the machineries. The acquisition…
Q: Sam Ltd owns a piece of vacant land in Broadmeadows. A substantial number of factory owners…
A: Under the fair value model, the assets are recorded at their current market value.
Q: Charlie Brown, controller for Kelly Corporation, is preparing the company’s income statement at…
A: Ethical issues refer to a situation wherein a person or an entity is required to choose between the…
Q: A group of environmentalists have purchased shares in a mining company. Some 200 members of the…
A: Shareholders are the owners of the organization and can participate in the decision-making process…
Q: A fertilizer manufacturing company wants to relocate to Lakeside County. A report from a fired…
A: Professional Ethics Professional ethics means holding moral principles that guide in carrying out…
Q: Presented below is a note disclosure for Matsui Corporation. Litigation and Environmental: The…
A: Contingent Liability: Contingent liability refers to any potential liability that can occur subject…
Q: in salalah is considered as a cash generating unit. On 31st December 2020, there was an impairment…
A: The amount by which the carrying value of an asset or a cash-generating unit exceeds its recoverable…
Q: The property of the former administrative centre of Tyre Ltd (Tyre) is owned by the company. Tyre…
A: According to IAS-16, land and property are distinct assets that must be accounted for individually,…
Q: Consider yourself the financial controller of Alpha. The managing director, who is not an…
A: Answer: Goodwill is a fixed intangible asset that offers the company competitive advantages.…
Q: Assume Norton Enterprises hires Concrete Company to pour a new cement driveway for its main office…
A: Answer: The correct option is: Concrete company removes material from another company's driveway…
Q: A fertilizer manufacturing company wants to relocate to Yellowstone County. A report from a fired…
A: Solution- Though ethics are relative term but it would be beneficial for the company if it discloses…
Q: Your company operates a theme park, which has the latest rides and an annual attendance of over 10…
A: Here discuss about the claim settlement process and account treatment which are included with the…
Q: Hart Corporation is a chemical company that produces cleaning fluids of different types. It is the…
A:
Q: Chip and Dale run separate logging companies in the same forest. Both pollute the river flowing…
A: The companies will be reducing the debris only up to that much amount where the cost of reducing it…
Q: Jack Company hired Jill as the external auditor in 2002 and his auditor's opinion for 2002 to 2004…
A: Here Jack Company hired Jill for an external Auditors to make the opinion about the financial report…
Q: Consider yourself the financial controller of Alpha. The managing director, who is not an…
A: International Financial Reporting Standards (IFRS) are the accounting standards developed by the…
A company spills chemicals onto Russian land, causing damage that will cost $7million to clean. There is no environmental legislation but the companyy has clear green policies on its website.
What are the effects of this on the Financial Statement of the company in the current year?
Step by step
Solved in 2 steps
- Sheila Company is engaged in the manufacture of chemicals which it exports to other countries. On December 25, 2021, one of its tanks in the production assembly plant exploded. Unfortunately one of its employees was caught by the accident and suffered severe burns all over his body. For damages sustained because of the explosion, the employee sued Sheila and claimed an amount totaling P10,000,000 for physical injuries sustained. The lawyers of Sheila expect that Sheila Company will probably lose the lawsuit and estimate that the company may have to pay an amount in the range of P5,000,000 to P8,000,000. On March 15, 2022, upon the advice of his lawyers, the injured employees offered to have an out of court settlement of P7,500,000. The offer was tendered on the same date and Sheila on the advice of its legal counsel accepted the said offer on March 20, 2022. Sheila’s financial statements for the year ended 2021 was issued on March 30, 2022. Sheila’s financial statements for the year…Dakota Corporation is an owner/operator of 15 water filtration systems in the Northwestern region of the United States. During February 2022, 4 of the tanks had leaks which contaminated the water and surrounding environment. Dakota is very concerned about their obligation to the community to maintain the environment. Dakota corrected the leaks by installing new water filters and liners which cost $500,000. These corrections will extend the life of the tanks and improve future production. These improvements will also prevent any future environmental contamination. Overall, the $500,000 spent on the new water filters and liners have improved the facility. Dakota is unsure whether the $500,000 spent for this environmental issue should be capitalized or expensed. Accounting Issue: Should Dakota capitalize or expense the $500,000 spent on the new water filters and liners?The Carlson Department Store suffered heavy damage when a hurricane struck on August 31, 2013. The store was closed for four months (Sept – Dec 2013) and Carlson is now involved in a dispute with its insurance company concerning the amount of lost sales during the time the store was closed. Two key issues must be resolved: The amount of sales Carlson would have made if the hurricane had not struck; and Whether Carlson is entitled to any compensation for excess sales from increased business activity after the storm More than $8 billion in federal disaster relief and insurance money came into the county, resulting in increased sales at department stores and numerous other businesses. The table below shows the sales data for the 48 months preceding the storm. The following table reports total sales for the 48 months preceding the storm for all department stores in the county, as well as the total sales in the county for the four months the Carlson Department Store was closed. Management…
- Several months ago, Jones Company experienced a spill of hazardous materials into the White River from one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $405,000. The company contested the fine. In addition, an employee is seeking $180,000 damages related to the spill. Finally, a homeowner has sued the company for $260,000. Although the homeowner lives 30 miles downstream from the plant, he believes that the spill has reduced his home’s resale value by $260,000. Jones’ legal counsel believes the following will happen in relationship to these incidents: (a) It is probable that the EPA fine will stand. (b) An out-of-court settlement for $165,000 has recently been reached with the employee, with the final papers to be signed next week. (c) Counsel believes that the homeowner’s case is weak and will be decided in favor of Jones Company. (d) Other litigation related to the spill is possible, but the damage amounts are uncertain. …Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $470,000. The company is contesting the fine. In addition, an employee is seeking $540,000 in damages related to the spill. Lastly, a homeowner has sued the company for $300,000. The homeowner lives 30 miles from the plant, but believes that the incident has reduced the home's resale value by $300,000. Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $230,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner's case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain. a. Journalize the contingent liabilities associated with the hazardous materials…Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $240,000. The company is contesting the fine. In addition, an employee is seeking $220,000in damages related to the spill. Finally, a homeowner has sued the company for $310,000. The homeowner lives 35 miles from the plant but believes that the incident has reduced the home’s resale value by $310,000. Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $125,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is much weaker and will be decided in favor of Ayers. Otherlitigation related to the spill is possible, but the damage amounts are uncertain. a. Journalize the contingent liabilities associated with the hazardous materials spill. Use…
- Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $276,000. The company is contesting the fine. In addition, an employee is seeking $202,000 in damages related to the spill. Finally, a homeowner has sued the company for $318,000. The homeowner lives 35 miles from the plant but believes that the incident has reduced the home’s resale value by $318,000.Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $130,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain.Required:a. On December 31, journalize the contingent liabilities associated with the…Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $430,000. The company is contesting the fine. In addition, an employee is seeking $540,000 in damages related to the spill. Lastly, a homeowner has sued the company for $270,000. The homeowner lives 30 miles from the plant, but believes that the incident has reduced the home's resale value by $270,000. Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $230,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner's case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain. a. Journalize the contingent liabilities associated with the hazardous materials…Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $248,000. The company is contesting the fine. In addition, an employee is seeking $213,000 in damages related to the spill. Lastly, a homeowner has sued the company for $324,000. The homeowner lives 35 miles from the plant but believes that the incident has reduced the home’s resale value by $324,000. Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $130,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain. Required: a. Journalize the contingent liabilities associated with the…
- On April 1, 2014, the company incurred capital cost of $100 million in respect of themine and it is expected that the mine will be abandoned in eight years’ time.The mine is situated in a country where there is no environmental legislationobliging companies to rectify environmental damage and is it very unlikely that anysuch legislation will be enacted within eight years.It has been estimated that the cost of cleaning the site and re-planting the treeswill be $25 million if the replanting were successful at the first attempt, but it willprobably be necessary to make a further attempt, which will increase the cost by afurther $5 million. The company’s cost of capital is 10%. Explain why a provision should be made for the cost of cleaning the site.The Environmental Protection Agency (EPA) is in the process of investigating a possible water contamination issue at the manufacturing facility of Northwest Forest Products. The EPA has not yet proposed a penalty assessment. Management feels an assessment is reasonably possible, and if an assessment is made, an unfavorable settlement is estimated between $20 and $30 million. How should Northwest Forest Products report this situation in its current financial statements?Bu Co. is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Bu's lawyer states that it is probable that Bu will lose the suit and be found liable for a judgment costing Bu anywhere from P1,600,000 to P8,000,000. However, the lawyer states that the most probable cost is P 4,800,000. As a result of the above facts, Bu should accrue: *a. a loss contingency of P 4,800,000 and disclose an additional contingency of up to P 3,200,000b. a loss contingency of P 1,600,000 and disclose an additional contingency of up to P 6,400,000c. a loss contingency of P 4,800,000 but not disclose any additional contingencyd. no loss contingency but disclose a contingency of P 1,600,000 to P 8,000,000