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Ludmilka [50]
4 years ago
10

Situation 1: A company offers a one-year warranty for the product that it manufactures. A history of warranty claims has been co

mpiled, and the probable amounts of claims related to sales for a given period can be determined. Situation 2: Subsequent to the date of a set of financial statements but prior to the issuance of the financial statements, a company enters into a contract that will probably result in a significant loss to the company. The amount of the loss can be reasonably estimated. Situation 3: A company has adopted a policy of recording self-insurance for any possible losses resulting from injury to others by the company’s vehicles. The premium for an insurance policy for the same risk from an independent insurance company would have an annual cost of $4,000. During the period covered by the financial statements, there were no accidents involving the company’s vehicles that resulted in injury to others. Discuss the accrual or type of disclosure necessary (if any) and the reason(s) why such disclosure is appropriate for each of the three independent sets of facts above.
Business
1 answer:
mr_godi [17]4 years ago
4 0

Answer:

Please find the detailed explanation below.

Situation 1 and 2 have disclosure while situation 3 does not require any disclosure.

Explanation:

Situation 1. Accrual. The one-year warranty has created what is known as contingent liability. Contingent liability is a type of liability that is dependent on the outcome of some specific actions which has happened in the past. The eventual liability may or may not happen. But since the probable claim from the one-year warranty has been determined, it should be disclosed. But if the claim cannot be determined, it shouldn't be disclosed.

Situation 2. Since this contract happened before the issuance of financial statement and the amount of loss from this contract can be reasonably estimated or determined, then it must be disclosed and the likely amount must also be disclosed. This disclosure will be under 'note to the financial statement'.

Situation 3. This is a self insurance and self insurance is not an insurance. There is no contingent liability in this situation. Also, there is no accident, no injury. Hence, this is no disclosure here.

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eimsori [14]

Answer:

The monthly production rate if a level strategy is selected with the goal of ending the fourth month with 400 units in inventory is b. 700 units/month

Explanation:

If the company operates a level production stategy and aims to have 400 units at the ending of the fourth month, then;

Opening inventory will be 100 units and monthly movement will be as follows;

Month     Opening     Demand    Produce     Closing

  1              100            -500           700       =    300

   2            300           -800            700      =    200

   3           200           -900             700       =    0

   4              0            -300              700       =  400

5 0
3 years ago
When will the Social Security fund dry up at its current level?
dlinn [17]

C) social security will run out by 2042.

7 0
3 years ago
Each account that is used can be classified as an asset. True or False
riadik2000 [5.3K]

Answer: I believe your answer will be TRUE.

3 0
3 years ago
Baldwin Company had 40,000 shares of common stock outstanding on January 1, 2018. On April 1, 2018, the company issued 20,000 sh
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Answer:

$56,667

Explanation:

Diluted EPS is a measure used to assess the quality of a company's earnings per share (EPS). Diluted EPS takes into calculation all convertible securities such as convertible bonds or convertible preferred stock, which are changed into equity or common stock.

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To calculate the Diluted Earnings per share,

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7 0
4 years ago
A company that makes organic fertilizer has supplied the following data: Bags produced and sold 240,000 Sales revenue $1,896,000
salantis [7]

Answer:

7.47 times

Explanation:

The computation of operating leverage is shown below:-

= (Sales - Variable costs) ÷ (Sales - Variable costs - Fixed costs)

= ($1,896,000 - $804,000 - $180,000) ÷ ($1,896,000 - $804,000 - $180,000 - $520,000 - $270,000)

= $912,000 ÷ $122,000

= 7.47 times

The (Sales - Variable costs) = Contribution margin

The  (Sales - Variable costs - Fixed costs) = EBIT

The correct answer is 7.47 times.Therefore, the option is not available.

8 0
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