The Commonwealth of Virginia filed suit in October 2016, against Northern Timber Corporation seeking civilpenalties and injunctive relief for violations of environmental laws regulating forest conservation. When the financial statements were issued in 2017, Northern had not reached a settlement with state authorities, but legal counseladvised Northern Timber that it was probable the ultimate settlement would be $1,000,000 in penalties. The following entry was recorded:Loss—litigation �������������������������������������������������������������������������������������������������� 1,000,000Liability—litigation����������������������������������������������������������������������������������������� 1,000,000Late in 2018, a settlement was reached with state authorities to pay a total of $600,000 to cover the cost ofviolations.Required:1. Prepare any journal entries related to the change.2. Briefly describe other steps Northern should take to report the change
The Commonwealth of Virginia filed suit in October 2016, 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 2017, Northern had not reached a settlement with state authorities, but legal counsel
advised Northern Timber that it was probable the ultimate settlement would be $1,000,000 in penalties. The following entry was recorded:
Loss—litigation �������������������������������������������������������������������������������������������������� 1,000,000
Liability—litigation����������������������������������������������������������������������������������������� 1,000,000
Late in 2018, a settlement was reached with state authorities to pay a total of $600,000 to cover the cost of
violations.
Required:
1. Prepare any
2. Briefly describe other steps Northern should take to report the change
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