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kolezko [41]
3 years ago
10

Ace Co. settled litigation on February 1, Year 2, for an event that occurred during Year 1. An estimated liability was determine

d as of Dec 31, Year 1. This estimate was significantly less than the final settlement. The transaction is considered to be material. The year-end financial statement for Year 1 have not been issued. How should the settlement be reported in Ace's Year 1 financial statements?
Business
1 answer:
valina [46]3 years ago
4 0

Answer:

<em>The Options include:</em>

a. Disclosure only of the settlement

b. Only an accrual of the settlement

c. Neither a disclosure nor an accrual

<em>d. Both a disclosure and an accrual. is Correct</em>

Explanation:

Since about the 1st of February, the financial information of Ace Co., Year 2, have not been obtained and the exact amount of the final settlement is established.

The whole amount must be included in the financial information of Ace Co. on December 31, Year 1 and reported as a "subsequent event."

That is an acknowledged subsequent event because it contributes to litigation originating in year 1.

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Explanation:

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Capital assets used by an enterprise fund should be accounted for in the enterprise fund and depreciation on the capital assets should be recorded.

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3 years ago
The ________ states that the opportunity cost of producing a good always rises as one produces more of it. group of answer choic
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The <u>law of increasing relative cost </u>states that the opportunity cost of producing a good always rises as one produces more of it.

According to the law of increasing costs, production eventually loses efficiency as it grows. The labor expenses for each additional item will increase, for instance, if increased production requires overtime work from your workforce.

Opportunity cost is the value of other commodities or services you must forgo in order to get your desired item. The term "cost" as used by economists often refers to opportunity cost. Cost is frequently mentioned in conversations or on the news.

According to the law of increasing opportunity cost, the cost of manufacturing the next unit rises as you keep up with the production of a given good.

Find more about opportunity cost

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This theory is sometimes used in management also we the perception that employees are the most important asset and if they are provided with proper facility their productivity will be at full, leading to development of organization.

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