Question

In: Accounting

Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s...

Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2018 financial statements are issued on March 15, 2019.

  1. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2019, judgment was rendered against Eastern in the amount of $113 million plus interest, a total of $128 million. Eastern plans to appeal the judgment and is unable to predict its outcome though it is not expected to have a material adverse effect on the company.
  2. In November 2017, the State of Nevada filed suit against Eastern, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On January 12, 2019, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $146 million will be required to cover the cost of violations. Eastern believes that the ultimate settlement of this claim will not have a material adverse effect on the company.
  3. Eastern is the plaintiff in a $206 million lawsuit filed against United Steel for damages due to lost profits from rejected contracts and for unpaid receivables. The case is in final appeal and legal counsel advises that it is probable that Eastern will prevail and be awarded $130 million.
  4. At March 15, 2019, Eastern knows a competitor has threatened litigation due to patent infringement. The competitor has not yet filed a lawsuit. Management believes a lawsuit is reasonably possible, and if a lawsuit is filed, management believes damages of up to $39 million are reasonably possible.

   
Required:
1. Determine the appropriate means of reporting each situation.
2. Prepare the appropriate journal entries for these situations.

Solutions

Expert Solution

ekkarill92 answered 2 months ago
Next > < Previous

Related Solutions

Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2016 financial statements are issued on March 15, 2017. a. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2017, judgment was rendered against Eastern in the amount of $118 million plus interest, a total of $133 million. Eastern plans to appeal the judgment and is unable to predict its...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2021 financial statements are issued on March 15, 2022. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2022, judgment was rendered against Eastern in the amount of $115 million plus interest, a total of $130 million. Eastern plans to appeal the judgment and is unable to predict its outcome...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2021 financial statements are issued on March 15, 2022. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2022, judgment was rendered against Eastern in the amount of $123 million plus interest, a total of $138 million. Eastern plans to appeal the judgment and is unable to predict its outcome...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s...
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2018 financial statements are issued on March 15, 2019. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2019, judgment was rendered against Eastern in the amount of $111 million plus interest, a total of $126 million. Eastern plans to appeal the judgment and is unable to predict its outcome...
Eastern Manufacturing is involved with several situations that possibly involve contingencies
Problem 13-6 Various contingencies [LO13-5, 13-6] Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2018 financial statements are issued on March 15, 2019. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2019, judgment was rendered against Eastern in the amount of $116 million plus interest, a total of $131 million. Eastern plans to appeal the judgment and...
Problem 13-6 Various contingencies [LO13-5, 13-6] Eastern Manufacturing is involved with several situations that possibly involve...
Problem 13-6 Various contingencies [LO13-5, 13-6] Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2018 financial statements are issued on March 15, 2019. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2019, judgment was rendered against Eastern in the amount of $107 million plus interest, a total of $122 million. Eastern plans to appeal the judgment and...
(Warranties and Loss Contingencies) The following two independent situations involve loss contingencies. Part 1: Benson Company...
(Warranties and Loss Contingencies) The following two independent situations involve loss contingencies. Part 1: Benson Company sells two products, Grey and Yellow. Each carries a 1-year warranty. 1.Product Grey—Product warranty costs, based on past experience, will normally be 1% of sales. 2.Product Yellow—Product warranty costs cannot be reasonably estimated because this is a new product line. However, the chief engineer believes that product warranty costs are likely to be incurred How should Benson report the estimated product warranty costs for...
For each of the situations described below, provide the information indicated below assuming it is December...
For each of the situations described below, provide the information indicated below assuming it is December 2018. Complete your discussion of each situation before going on to the next situation. These are not related and should be looked at separately. 1. Type of accounting change. 2. Manner of reporting the change under current generally accepted accounting principles including a discussion, where applicable, of how amounts are computed. 3. Effect of the change on the balance sheet and income statement. 4....
For each of the situations described below, provide the information indicated below assuming it is December...
For each of the situations described below, provide the information indicated below assuming it is December 2017. Complete your discussion of each situation before going on to the next situation. These are not related and should be looked at separately. 1. Type of accounting change. 2. Manner of reporting the change under current generally accepted accounting principles including      a discussion, where applicable, of how amounts are computed. 3. Effect of the change on the balance sheet and income statement....
For each of the ethical situations described below, identify the specific tenet of the AHIMA Code...
For each of the ethical situations described below, identify the specific tenet of the AHIMA Code of Ethics that has been violated, explain what is wrong with the action, and describe what the HIM professional should have done or said. Hearing of a job in a hospital in the next town where the salary is better and the working conditions more pleasant, Erica Abbott, RHIA, applies for it. During her interview, she states that she earned her degree in a...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT