Chapter 11, Problem 6QAP

The review of minutes and confirmation letter obtained from the legal counsel of the company revealed the following information: • EMPLEO has been named a liable party for toxic waste cleanup on its land, and must pay an as-yet undetermined amount for environmental remediation activities. An adjoining land owner, Clear Toothpaste Company, sold its property because of possible toxic contamination of the water supply and resulting potential adverse public reaction towards its product. Clear Toothpaste sued EMPLEO for damages. There is reasonable possibility that Clear Toothpaste will prevail and be awarded between P250,000 and P600,000. o EMPLEO is also the defendant of a lawsuit on an incident involving an accidental crash by its company car to another vehicle. In your inspection of the letter obtained from its legal counsel, they believe that the company would be liable to pay damages amounting to P300,000, but it is also possible that it will pay up to P500,000. Question: How much…

Hanover leased a portion of his farm to Brown and Black, doing business as the Colorite Hatchery. Brown went upon the premises to remove certain chicken sheds that he and Black had placed there for hatchery purposes. Thinking that Brown intended to remove certain other sheds, which were Hanover’s property, Hanover accosted Brown, who willfully struck Hanover and knocked him down. Brown then ran to the Colorite truck, which he had previously loaded with chicken coops, and drove back to the hatchery. On the way, he picked up George, who was hitchhiking to the city to look for a job. Brown was driving at seventy miles an hour down the highway. At an open intersection with another highway, Brown in his hurry ran a stop sign, striking another vehicle. The collision caused severe injuries to George. Immediately thereafter, the partnership was dissolved, and Brown was insolvent. Hanover and George each bring separate actions against Black as copartner for the alleged tort committed by Brown…

Several years ago, Grant County was sued by a former County employee for wrongful discharge. Although it was to be contested by the County, at the time of the lawsuit the attorneys believed that the County was likely to lose and the estimated amount of the ultimate judgment would be $100,000. This year, the case was finally settled with a judgment against the County of $150,000, which was paid. Assuming that the County maintains its books and records in a manner to facilitate the preparation of its government-wide financial statements, the entry in the current year should be a. Debit Expenditures $150,000; Credit Cash $150,000. b. Debit Expenses $150,000; Credit Cash $150,000. c. Debit Expenditures $50,000 and Claims Payable $100,000; Credit Cash $150,000. d. Debit Expenses $50,000 and Claims Payable $100,000; Credit Cash $150,000.