Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern's fiscal

year ends December $31,$ and the $2024$ financial statements are issued on March $15,2025.$

a$.$ Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February $3,2025,$ judgment was rendered against

Eastern in the amount of $$114$ million plus interest, a total of $$129$ million. Eastern plans to appeal the judgment and is unable to

predict its outcome though it is not expected to have a material adverse effect on the company.

b$.$ In November $2023,$ the State of Nevada filed suit against Eastern, seeking civil penalties and injunctive relief for violations of

environmental laws regulating hazardous waste. On January $12,2025,$ Eastern reached a settlement with state authorities. Based

upon discussions with legal counsel, the Company feels it is probable that $$147$ million will be required to cover the cost of

violations. Eastern believes that the ultimate settlement of this claim will not have a material adverse effect on the company.

c$.$ Eastern is the plaintiff in a $$207$ million lawsuit filed against United Steel for damages due to lost profits from rejected contracts

and for unpaid receivables. The case is in final appeal and legal counsel advises that it is probable that Eastern will prevail and

be awarded $$100$ million.

d$.$ At March $15,2025,$ Eastern knows a competitor has threatened litigation due to patent infringement. The competitor has not yet

filed a lawsuit. Management believes a lawsuit is reasonably possible, and if a lawsuit is filed, management believes damages of

up to $$40$ million are reasonably possible.

Required:

Determine the appropriate way to report each situation.

Prepare the appropriate journal entries for these situations.