Chapter 4, Problem 7QAP

On October 15, 2009, in Fort Collins, Colorado, the parents of a six-year-old boy, Falcon Heene, claimed that he had floated away in a homemade helium balloon that was shaped to resemble a silver flying saucer. Some in the media referred to the incident as “Balloon Boy.” The authorities closed down Denver International Airport, called in the National Guard, and a police pursuit ensued. After an hour-long flight that covered more than 50 miles across three counties, the empty balloon was found near the airport. It was later determined that the boy was hiding in the house all along in an incident that was a hoax and motivated by publicity that might lead to a reality television show. The authorities blamed the father, Richard, for the incident and decided to prosecute him. Richard Heene pleaded guilty on November 13, 2009, to the felony count of falsely influencing authorities. He pleaded to protect his wife, Mayumi, a Japanese citizen, whom he believed may have been deported if Richard…

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…

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…

Varney operated one of two 5-ton cranes in a factory. Both cranes were to act simultaneously in lifting a 9- ton machine. The other operator was busy elsewhere, so Varney, who was in a hurry, tried to lift the machine with his crane alone. The cable broke after the load was 10 feet above the floor, and a worker who happened to be walking under the crane but who had nothing to do with the operation was injured. Has the worker a valid cause of action against Varney?

On a rainy afternoon two years ago, John Smiley left work early to attend a family birthday party. Eleven minutes later, a careening truck slammed into his SUV on the freeway causing John to spend two months in a coma. Now he can’t hold a job or make everyday decisions and is in need of constant care. Last week, the 40-year-old Smiley won an out-of-court settlement from the truck driver’s company. He was awarded payment for all medical costs and attorney fees, plus a lump-sum settlement of $2,330,716. At the time of the accident, John was president of his family’s business and earned approximately $200,000 per year. He had anticipated working 25 more years before retirement. 10 John’s sister, an acquaintance of yours from college, has asked you to explain to her how the attorneys came up with the settlement amount. “They said it was based on his lost future income and a 7% rate of some kind,” she explained. “But it was all ‘legal-speak’ to me.” Required: How was the amount of 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 $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…

When filing a citizen suit, a private citizen or organization must   Multiple Choice have permission from the EPA to sue. be authorized by statute. be authorized by statute and not profit from the enforcement action. be an established environmental protection group.   Jordan owned three homes in three different states. He told Monica that she could live in his Iowa home until he decided to start using the home again in the future. Monica moved in and lived there for 13 years when Jordan called and said that he wished to start using the home and that she must move out. Monica told Jordan that the statutory period for adverse possession in Iowa is 10 years and that she was now the owner. Who owned the property?   Multiple Choice Jordan owned the home because Monica was not in adverse or hostile possession since she was there with his consent. Monica owned the home because she was there with Jordan's permission and had not broken the law. Jordan owned the home because he…