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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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Andre45 [30]

Answer:

II. Prevention costs are costs that are incurred to prevent the sale and production of defective units.

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3 years ago
Security X has an expected rate of return of 13% and a beta of 1.15. The risk-free rate is 5%, and the market expected rate of r
kondaur [170]

Answer:

B) overpriced

Explanation:

Please see attachment

8 0
3 years ago
Prepare adjusting journal entries, as needed, for the following items. (If no entry is required for a transaction/event, select
Wewaii [24]

Answer:

Explanation:

The adjusting entries are shown below:

1. Supplies expense A/c Dr $370

       To supplies A/c                          $370

(Being supplies account is adjusted)

The supplies expense is computed by

= Supplies balance - supplies on hand

= $570 - $200

= $370

2. Insurance expense A/c Dr $190

         To Prepaid Insurance                  $190

(Being prepaid insurance is adjusted)

3. Salaries expense A/c $1,280

          To Salaries payable A/c        $1,280

(Being salary is adjusted)

The salaries expense is computed by

= Total five days × number of days ÷ total number of days

= $3,200 × (2 ÷ 5)

= $1,280

4. Electricity expense A/c Dr $270

       To electricity payable A/c          $270

(Being electricity usage is adjusted)

7 0
3 years ago
What is a nonprofit corporation, and how is it different from a C corporation?
nalin [4]

Answer:

A corporation is to make profit

non-profit coorporation don't have any shareholders, so they serve a different function. Thier focus is on something other than making profit

3 0
2 years ago
Read 2 more answers
A Restaurant is open only for 25 days in a month. Expenses for the restaurant include raw material for each sandwich at $4.00 pe
Montano1993 [528]

Answer:

   profit for the day           $ 2,001.64

Explanation:

We should subtract from the revenue of the 200 sandwhich prepared and sold the variable cost to made the sandwhihc the loss for the lost sales and the proportional fixed cost considered are allocated among the 25 days which the restaurant is open.

200 x $15 dollars =             $ 3,000

28 x $5 loss sales:              $   (140)

variable cost: 200 x $4       $  (800)

proportional fixed cost:

(1,234 + 225) / 25 =          <u>   $ (58.36)     </u>

     profit for the day           $ 2,001.64

4 0
3 years ago
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