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The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31. Financial statements are issued in March 2019. Erismus prepares its financial statements according to U.S. GAAP. Required: Indicate the amount Erismus would record as an asset, liability, or not accrued in the following circumstances 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1760.000 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2.720,000 to $5,440,000, with any damage in that range equally likely 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $5.580,000, with a present value of $3.906.000 4. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, the judgment will be $1760.000. 5. Erismus is a plaintiff in a lawsuit Erismus's management believes it is virtually certain that the company eventually will prevailin court, and that fit prevails, the judgment will be $675.000 - Classification amount Transit Airlines provides regional Jet service in the Mid-South. The following is information on liabilities of Transit at December 31, 2018 Transit's fiscal year ends on December 31. Its annual financial statements are issued in April 1 Transit has outstanding 75% bonds with a face amount of $76 million. The bonds mature on July 31, 2027 Bondholders have the option of calling (demanding payment on the bonds on July 31, 2019, at a redemption price of $76 million Market conditions are such that the call option is not expected to be exercised. 2. A $40 million 7% bank loan is payable on October 31, 2024. The bank has the right to demand payment after any fiscal year-end in which Transit's ratio of current assets to current liabilities falls below a contractual minimum of 1.9 to 1 and remains so for 6 months. That ratio was 175 on December 31, 2018, due primarily to an intentional temporary decline in parts inventories. Normal inventory levels will be reestablished during the sixth week of 2019. 3. Transit management intended to refinance $38 million of 3% notes that mature in May of 2019. In late February 2019, prior to the issuance of the 2018 financial statements, Transit negotiated a line of credit with a commercial bank for up to $34 million any time during 2019. Any borrowings will mature two years from the date of borrowing. 4. Transit is involved in a lawsuit resulting from a dispute with a food caterer. On February 13, 2019. judgment was rendered against Transit in the amount of $60 million plus interest, a total of $61 million. Transit 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. Required: 1. How should the 75% bonds be classified by Transit among liabilities in its balance sheet? 2. How should the 7% bank loan be classified by Transit among abilities in its balance sheet? 3. How should the 3% notes be classified by Transit among liabilities in its balance sheet? 4. How should the lawsuit be reported by Transit? 5. Calculate the total current liabilities, total long-term liabilities, and total liabilities of a classified balance sheet for Transit Airlines at December 31, 2018. Transit's accounts payable and accruals were $45 million Complete this question by entering your answers in the Required: 1. How should the 75% bonds be classified by Transit among liabilities in its balance sheet? 2. How should the 7% bank loan be classified by Transit among liabilities in its balance sheet? 3. How should the 3% notes be classified by Transit among liabilities in its balance sheet? 4. How should the lawsuit be reported by Transit? 5. Calculate the total current liabilities, total long-term liabilities, and total liabilities of a classified balance sheet for Transit Airlines at December 31, 2018. Transit's accounts payable and accruals were $45 million Complete this question by entering your answers in the tabs below. Reg 1 to 4 Reg 5 How should the 7.5% bonds, 7% bank loan and 3% notes be classified by Transit among liabilities in its balance sheet. How should the lawsuit be reported by Transit? (Enter your answers in millions.) million million milion 4 The lawsuit should be reported as Rag ito Req5 > Required: 1. How should the 7.5% bonds be classified by Transit among liabilities in its balance sheet? 2. How should the 7% bank loan be classified by Transit among liabilities in its balance sheet? 3. How should the 3% notes be classified by Transit among liabilities in its balance sheet? 4. How should the lawsuit be reported by Transit? 5. Calculate the total current liabilities, total long-term liabilities, and total liabilities of a classified balance sheet for Transit Airlin December 31, 2018. Transit's accounts payable and accruals were $45 million Complete this question by entering your answers in the tabs below. Reg 1 to 4 Reg 5 Calculate the total current abilities, total long-term liabilities, and total liabilities of a classified balance sheet for Transit Airlines at December 31, 2018. Transit's accounts payable and accruals were $45 million. (Enter your answers in millions.) Total current liabilities Total long-term liabilities Total liabilities million million million
