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Alenkasestr [34]
3 years ago
15

Potter’s accountant believes the financial statements will be misleading if the probable loss contingency is not disclosed. How

much should be disclosed, and how much should be accrued in Potter’s financial statements for the current year?
Business
1 answer:
nika2105 [10]3 years ago
6 0

Complete Question:

Potter Co. has the following contingencies, all resulting from lawsuits in progress during the current year:

Probable loss contingency $1,500,000; Reasonably possible loss contingency 500,000; Probable gain contingency 700,000; Reasonably possible gain contingency 300,000.

Potter's accountant believes the financial statements will be misleading if the probable loss contingency is not disclosed. How much should be disclosed, and how much should be accrued in Potter's financial statements for the current year?

A. Disclosed $1,000,000 gain

Accrued $1,500,000 loss & $500,000 loss

B. Disclosed $500,000 loss & $1,000,000 gain

Accrued$1,500,000 loss & $700,000 gain

C. Disclosed $2,000,000 loss & $1,000,000 gain

Accrued $1 ,500,000 loss

D. Disclosed $500,000 loss & $300,000 gain

Accrued $1,500,000 loss

Answer:

Option C Disclosed $2,000,000 loss & $1,000,000 gain

Accrued $1 ,500,000 loss

Explanation:

All the gains that are certain which means that are more than 95% chances of gain then it must be realized as gain otherwise it must be ignored. In this case, there is no gain that is reasonably certain. So the realized gain amount is zero. On the other hand, the liabilities must be realized when the chances of occurrence of the outcome is probable or certain which in this case is $1,500,000 and must be recognized as increase in liability.

Furthermore, the gains which are reasonably probable and possible gains must be disclosed in the financial statement. In this case the probable and possible gain are $700,000 and $300,000. This means that the amount $1,000,000 must be recognized as possible gain. And on the other hand, possible and probable losses must be disclosed in the financial statement which in this case are $1,500,000 probable losses and $500,000 possible losses. So the amount that must be disclosed as losses are $2,000,000.

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John wishes to set up an account for his grandfather so that he can have some extra money each month. John wants his grandfather
jeka94

Answer:

John must invest $3719.4

Explanation:

It is given that John grandfather withdraws $120 per month for 3 year

So total month = 12 ×3 =36 months

Total amount withdrawn S = 36×120 = 4320

m = 12 times per year

Rate of interest i = 5 % = 0.05

We know that S=P(1+\frac{i}{m})^{mt}

4320=P(1+\frac{0.05}{12})^{36}

4320=P\times 1.1614

P = $3719.41

So john must invest $3719.4

6 0
3 years ago
Evelyn invests $5,000 in a savings account that pays interest at a rate of 6.7% compounded annually. If she withdraws half the i
My name is Ann [436]

Answer:

$371

Explanation:

The computation of additional interest during the fourth year is shown below:

but before that we need to do the following calculations

Amount = Principal × (1 + (rate of interest ÷ (1 × 100)))^(1 × number of years)

A = $5,000 × (1 + (6.7% ÷ (1 × 100)))^(1 × 3)

= $5,000 × (1 + (6.7 ÷ 100))^(1 × 3)

= $5,000 × (1 + 0.067)^3

= $5,000 × (1.067)^3

= 5000 × 1.214

= $6,070

Now, Interest gained after 3 years on the amount of Principal is

= $6,070 - $5,000

= $1,070

Here Evelyn issued interest which is half that is earned at the end of the 3rd year

Sp,

Half of the interest gained will be

= $1,070 ÷ 2

= $535

Now,

The new Principal amount for 4th year is

= $6,070 - $535

= $5,535

So, the final amount in the fourth year is

A = P × (1 + (r ÷ n))^(nt)

= $5,535 × (1 + 0.067 ÷ 1 ]^(1 × 1)

= $5,535 × 1.067

= $5.905.845

Hence the additional interest in the fourth year is

= $5,905.845 - $5,535

= $370.845

or

= $371

Therefore for computing the additional interest during the fourth year we simply applied the above formula.

8 0
3 years ago
Achieving a differentiation-based competitive advantage does NOT involve:a. incorporating product attributes and user features t
BARSIC [14]

Answer:

None of the above

Explanation:

As the differentiation strategy focuses on the gaining maximum customers even in highly competitive market, this is done by maximum customer service and includes all of the above.

Thus all the statements in the question are valid and are part of discrimination policy.

Whether it be the additional cost benefit to customers, the extra benefits of using the product, or the increase in satisfaction in customers with any-kind like, non economic or intangible.

5 0
3 years ago
At the end of the 2020 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2021. In 2021
Nata [24]

Answer:

B) $20

Explanation:

Calculation for how much that would be recorded as the 2021 expenditure

Using this formula

Expenditure =Invoiced cost-General fund

Let plug in the formula

Expenditure =$520-$500

Expenditure =$20

Therefore the amount that would be recorded as the 2021 expenditure will be $20

8 0
3 years ago
What is the safest way to dispose of old bank account statements
Sidana [21]
B: shred them in a paper shredder

4 0
3 years ago
Read 2 more answers
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