On 15 January, 20X8, the company settled and paid a personal injury claim of a former employee as the result of an accident that occurred in March 20X0. The company had not previously recorded a liability for the claim? is this an adjusting or non-adjusting event?

On 15 January, 20X8, the company settled and paid a personal injury claim of a former employee as the result of an accident that occurred in March 20X0. The company had not previously recorded a liability for the claim? is this an adjusting or non-adjusting event?

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter21: Management: Employment Discrimination

Section: Chapter Questions

Problem 2QAP

See similar textbooks

Similar questions

Northwest Company determined that it has an obligation relating to employees' rights to receive compensation for future absences attributable to employees’ services already rendered. The obligation relates to rights that vest, and payment of the compensation is probable. The amounts of Northwest's obligations as of December 31 are reasonably estimated as follows: Vacation pay P110,000 Sick pay 80,000 In its December 31 financial position, what amount should Northwest report as its liability for compensated absences?
On December 13, 2019, TJH Company was in an accident with an automobile driven by DEF. TJH received notice on December 31,2019 of a lawsuit for P600,000 damages for personal injuries suffered by DEF. TJH's counsel believes it is probable that DEF will be awarded an estimated amount in the range between P300,000 and P600,000 and that P 450,000 is a best estimate of potential liability. TJH’s accounting year ends on December 31 and the 2019 financial statements were issued on March 2, 2020. On April 30,2020,before the financial statements were issued, TJH settled DEF for the amount of P 500,000.What amount of liability should TJH Company recognize at December 31, 2019?
Polska SA, in preparation of its December 31, 2019, financial statements, is attempting todetermine the proper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for €350,000 and €60,000have been filed against the company. It is the judgment of Polska's legal counsel that an unfavorableoutcome is unlikely in the €60,000 case but that an unfavorable verdict approximating €250,000 willprobably result in the €350,000 case.2. Polska Corporation owns a subsidiary in a foreign country that has a book value of €5,725,000 andan estimated fair value of €9,500,000. The foreign government has communicated to Polska itsintention to expropriate the assets and business of all foreign investors. On the basis of settlementsother firms have received from this same country, it is virtually certain that Polska will receive 40%of the fair value of its properties as final settlement.3. Polska's chemical product division…
Xing Fu ltd., in preparation of its December 31, 2019, financial statements, is attempting to determine the proper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for €175,000 and €50,000 have been filed against the company. It is the judgment of Xing Fu's legal counsel that an unfavorable outcome is unlikely in the €50,000 case but that an unfavorable verdict approximating €150,000 will probably result in the €175,000 case.2. Xing Fu owns a subsidiary in a foreign country that has a book value of €6,500,000 and an estimated fair value of €10,000,000. The foreign government has communicated to Xing Fu its intention to expropriate the assets and business of all foreign investors. On the basis of settlements other firms have received from this same country, it is virtually certain that Xing Fu will receive 50% of the fair value of its properties as final settlement.3. Xing Fu operates profitably from a…
On May 20, 2018 a passenger was injured while disembarking one of the company’saeroplane. This was partially the result of his own negligence. The passenger suedRaleigh Airlines Ltd. for $1,000,000. Raleigh’s legal counsel believes it is possible butnot probable that the outcome of the suit will be unfavourable and that the settlementwould cost the company from $500,000 to $800,000. Discuss the proper accountingtreatment, including any required disclosure for the situation. Give the rationale foryour answer.
Sunrise Company provided the following information on December 31, 2019: A personal injury liability suit for P500,000 was brought against Sunrise Company in March 2019. The management and legal counsel of Sunrise Company concluded that it is not probable that Sunrise Company will be responsible for damages and that P150,000 is the best estimate of the damages. In July 2019, Sunrise Company became involved in a tax dispute with the BIR pertaining to 2018 income tax. In December 2019, a judgment for P400,000 was assessed against Sunrise Company by the tax court. Sunrise Company is appealing the amount of judgment. The tax advisor and legal counsel of Sunrise Company believed it is probable that the assessment can be reduced on appeal by 50%. Sunrise Company signed as guarantor for P200,000 loan by PNB to Sunset Company, a principal supplier of Sunrise. By reason of financial difficulties, it is probable that Sunrise Company shall pay P200,000 loan with only a 60% recovery anticipated…
Sunshine Limited, in preparation of its December 31, 2020, financial statements, is attempting to determine theproper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for $350,000 and $60,000 have beenfiled against the company. It is the judgement of Sunshine’s legal counsel that an unfavourable outcome isunlikely in the $60,000 case but that an unfavourable verdict approximating $250,000 will probably result in the$350,000 case.2. Sunshine Limited owns a subsidiary in a foreign country that has a book value of $5,725,000 and an estimatedfair value of $9,500,000. The foreign government has communicated to Sunshine its intention to expropriate theassets and business of all foreign investors. On the basis of settlements other firms have received from this samecountry, it is virtually certain that Sunshine will receive 40% of the fair value of its properties as final settlement.3. Sunshine’s chemical…
On November 5,2019, ABC Company was in an accident with an auto driven by Y. ABC Company received a notice on January 12, 2020 of a lawsuit for P 700,000 damages for a personal injuries suffered by Y. ABC's legal counsel believes it is probable that Y will be awarded an estimated amount in the range between P 200,000 and P 450,000 and that P 300,000 is the best estimate. ABC's accounting year ends on December 31 and the 2019 financial statements were issued on March 3, 2020.What amount of loss should ABC accrue at December 31,2019?
Below are two independent situations. Discuss the proper accounting treatment, including any required disclosures, for each situation. Give the rationale for your answers. In August, 2022, a worker was injured in the factory in an accident, partially the result of his own negligence. The worker has sued Mikell Co. for $800,000. Counsel believes it is reasonably possible that the outcome of the suit will be unfavorable and the settlement would cost the company from $250,000 to $500,000 A suit for breach of contract seeking damages of $2,000,000 was filed by an author against Kenley Company on October 4, 2022. Kenley’s legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the award to the plaintiff is between $500,000 and $1,500,000. No amount within this range is a better estimate of potential damages than any other amount.
On November 5, 2008, a Breakthrough Company truck was in an accident with an auto driven by McAllen. Breakthrough received notice on January 15, 2009, of a lawsuit for P4,000,000 damages for personal injuries suffered by McAllen. Breakthrough’s counsel believes it is probable that McAllen will be awarded an estimated amount in the range between P2,000,000 and P3,000,000, and no amount is a better estimate of potential liability than any other amount. The accounting year, ends on December 31, and the 2008 financial statements were issued on March 31, 2009. What amount of provision should Breakthrough accrue at December 31, 2008? 3,000,0003,000,000 2,000,0002,000,000 2,500,0002,500,000 4,000,0004,000,000 None of these
Polska SA, in preparation of its December 31, 2019, financial statements, is attempting to determine the proper accounting treatment for each of the following situations. As a result of uninsured accidents during the year, personal injury suits for €350,000 and €60,000 have been filed against the company. It is the judgment of Polska's legal counsel that an unfavorable outcome is unlikely in the €60,000 case but that an unfavorable verdict approximating €250,000 will probably result in the €350,000 case. Polska Corporation owns a subsidiary in a foreign country that has a book value of €5,725,000 and an estimated fair value of €9,500,000. The foreign government has communicated to Polska its intention to expropriate the assets and business of all foreign investors. On the basis of settlements other firms have received from this same country, it is virtually certain that Polska will receive 40% of the fair value of its properties as final settlement. Polska's chemical product division…
9. On November 5, 2018, Dianne company truck was in an accident with an auto driven by Billy Co. Dianne Co. received notice on January 12, 2019 of a lawsuit for 1,400,000 damages for personal injuries suffered by Billy Co. Dianne’s counsel believes it is probable that Billy will be awarded an estimated amount in the range between 400,000 and 1,000,000. Damn’s accounting year ends on December 31, and the 2018 financial statements were issued on March 2, 2019. What amount of provision should Damn accrue at December 31, 2018?