Question
Can someone please check this answer if its correct and if it's not please make a correction. Thank you! For each of the following situations
Can someone please check this answer if its correct and if it's not please make a correction. Thank you!
For each of the following situations indicate the proper disclosure of the companys financial statements. In the space provided provide one of the following answer choices: | R = Record as a Liability D = Disclose in the footnotes NR= Not recorded nor disclosed
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A company provides a three year warranty on all products sold. From past experience the company knows that 13.3 % of the current years sales will become warranty claims. | R |
A customer spills very hot coffee and scalds the skin on their arms and legs. He/she incurs significant medical expenses and sues the company for damages. The company actively advertises they serve the hottest coffee in town and denies any liability. | NR |
The Environmental Protection Agency has filed a lawsuit against a company for harming the environment with toxic emissions. The company believes the loss is probable but cannot make an estimate of the loss since no claimants have come forward. | D |
A company is sued because their product probably caused bodily injury to 100s of customers. Legal counsel has provided a reasonable estimate of the loss. | R |
A customer claims to have slipped in a grocery store and sues the store for damages related to the injury, claiming negligence by the store. The stores security cameras clearly show that the customer faked the incident and as a result, the store believes they have no liability for the incident. | NR |
A company is involved in a patent infringement case. The company believes that there is a reasonable possibility that they might lose the lawsuit but no estimate of the loss can be made | D |
A store mails 50,000 coupons in a monthly mailer. The store estimates that 20 % of the $10.00 coupons will be redeemed. | R |
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