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zhuklara [117]
3 years ago
5

Freeman​ Motors, a motorcycle​ manufacturer, had the following contingencies. Determine the appropriate accounting treatment for

each of the situations Freeman is facing. a. Freeman estimates that it is reasonably possible but not likely that it will lose a current lawsuit.​ Freeman's attorneys estimate the potential loss will be​ $4,500,000. ▼ Describe the situation in a note to the financial statements. Do not disclose. Record an expense and a liability based on estimated amounts. b. Freeman received notice that it was being sued. Freeman considers this lawsuit to be frivolous. ▼ Describe the situation in a note to the financial statements. Do not disclose. Record an expense and a liability based on estimated amounts. c. Freeman is currently the defendant in a lawsuit. Freeman believes it is likely that it will lose the lawsuit and estimates the damages to be paid will be​ $75,000.
Business
1 answer:
mrs_skeptik [129]3 years ago
6 0

Answer:

a. Freeman estimates that it is reasonably possible but not likely that it will lose a current lawsuit.​ Freeman's attorneys estimate the potential loss will be​ $4,500,000.

  • Describe the situation in a note to the financial statements.

Since the event is possible but not likely, it should be disclosed in the footnotes of the financial statements.

b. Freeman received notice that it was being sued. Freeman considers this lawsuit to be frivolous.

  • Do not disclose.

Since this is a frivolous lawsuit, there is no need to disclose it.

c. Freeman is currently the defendant in a lawsuit. Freeman believes it is likely that it will lose the lawsuit and estimates the damages to be paid will be​ $75,000.

  • Record an expense and a liability based on estimated amounts.

Since the negative outcome is probable and you were able to quantify your losses, you must record the expense for $75,000 and include the amount as a current liability.

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Willow Corporation had three employees. Two of the employees worked full-time and earned salaries of $25,000 each. The third emp
Montano1993 [528]

Answer:

$102

Explanation:

FUTA tax due from Willow Corporation for 2019, after the credit for state unemployment taxes, can be calculated by deducting the Paid state unemployment tax by the FUTA tax.

DATA

Paid State Unemployment Tax = (7,000+7,000+3,000) x 5.4%

Paid State Unemployment Tax = $918

FUTA tax rate in 2019 = 6%

Solution

FUTA tax (6% x $17,000) = $1,020

FUTA tax due =  $1,020 - $918

FUTA tax due = $102

7 0
3 years ago
Parties more interested in managerial accounting data than in financial accounting data include
zvonat [6]
<span>The phase of accounting that is concerned with providing information to managers for use within the organization.

</span><span>Production manager, VP of Business Planning, Controller</span>
8 0
3 years ago
LLY Corporation is planning to issue a $1,000 face value bond with a maturity of 30 years. The annual coupon rate is expected to
VladimirAG [237]

Answer:

$739.72 ≈  739.72

Explanation:

we can use an excel spreadsheet and the present value function to calculate the expected price of each bond ⇒ =PV(rate,nper,pmt,fv,[type])

  • fv = $1,000
  • pmt = $1,000 x 7.25% x 1/2 = $36.25
  • nper = 60
  • rate = 10% / 2 = 5%
  • present value = ?

=PV(5%,60,36.25,1000) = -739.72 since excel calculates the initial investment, it is always negative, so we just change the sign.

6 0
3 years ago
Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $1
uysha [10]

Answer:

a). Accounting profits=$6,000

b). Economic profit=-$6,000

Explanation:

a). The accounting profits for Gomez's pottery firm can be expressed in the form;

Accounting profits-Total monetary revenue-Total monetary expenses

where;

Total monetary revenue=$86,000

Total monetary expenses=excludes opportunity cost=wages+rent+materials+equipment=(14,500+7,500+18,000+40,000)=$80,000

replacing;

Accounting profits=(86,000-80,000)=$6,000

Accounting profits=$6,000

b). Gomez's economic profit

Economic profit=Total revenue-total costs

where;

Total revenue=(86,000+5,000+6,000)=97,000

Total costs includes opportunity cost=(80,000+23,000)=103,000

replacing;

Economic profit=(97,000-103,000)=-$6,000

Economic profit=-$6,000

6 0
3 years ago
As a human resource manager, how would you recommend that a part-time<br> employee is compensated?
barxatty [35]

Answer:

C. Part-time employees should be compensated with an hourly wage

because the number of hours they may work each month

changes

<u>Multiple-choices</u>

employee is compensated?

A. Part-time employees should be compensated with a salary

because the number of hours they may work each month

changes

O

B. Part-time employees should be compensated with an hourly wage

because the number of hours they work each month is always the

same.

O

C. Part-time employees should be compensated with an hourly wage

because the number of hours they may work each month

changes

O

D. Part-time employees should be compensated with a salary

because the number of hours they work each month is always the

same.

Explanation:

Part-time workers are called to duty on a need basis.  Usually, part-time workers are assigned specific tasks to perform is within a particular duration. Their contribution is measured in terms of hours worked or completed units of output.

Part-time workers contrast with full-time workers who report for duty every working day. Part-time workers are not required to work for certain hours per week or month like full-time workers. The number of hours that a part-time worker works in a week varies from time to time. Therefore, the best way of compensating them is through an hourly rate.

8 0
3 years ago
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