Question
1. At December 31, 2013 Tango Company is suing Jazz Company for using its special patented dance moves. Tango is suing Jazz for $250,000 and
1. At December 31, 2013 Tango Company is suing Jazz Company for using its special patented dance moves. Tango is suing Jazz for $250,000 and Tango's lawyers believe that it is probable that Tango will win. A decision is expected to be made by the judge by the end of 2014.
Should Tango: Accrue and Disclose, Disclose Only, or Do Nothing?
- Accrue and disclose
- Disclose only
- Do nothing
2. Tulip Co. is a public company is in the midst of a court case at year-end with Buzz Co. All parties' lawyers feel quite certain that Buzz will be successful in the case, and that Tulip will have to pay a material amount, between $2,000,000 and $2,100,000.
How should Tulip Co. communicate this information in its year-end financial statements?
- Recognize a provision.
- Do nothing.
- Disclose only.
1. At December 31, 2013 Tango Company is suing Jazz Company for using its special patented dance moves. Tango is suing Jazz for $250,000 and Tango's lawyers believe that it is probable that Tango will win. A decision is expected to be made by the judge by the end of 2014.
Should Tango: Accrue and Disclose, Disclose Only, or Do Nothing?
- Accrue and disclose
- Disclose only
- Do nothing
2. Tulip Co. is a public company is in the midst of a court case at year-end with Buzz Co. All parties' lawyers feel quite certain that Buzz will be successful in the case, and that Tulip will have to pay a material amount, between $2,000,000 and $2,100,000.
How should Tulip Co. communicate this information in its year-end financial statements?
- Recognize a provision.
- Do nothing.
- Disclose only.
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Fundamentals of Cost Accounting
Authors: William Lanen, Shannon Anderson, Michael Maher
4th edition
78025524, 978-0078025525
