Al March 13, 2025, the Securities Exchange Commission is in the process of investigating a possible securities law violation by Now Chemical. The SEC has not yet proposed a penalty assessment. Now's fiscal year ends on December 31, 2024, and its financial statements are published in March 2025. Management feels an assessment is reasonably possible, and if an assessment is made, an unfavorable settlement of $13 million is probable. What, if any, action should Now take for its financial statements?

Al March 13, 2025, the Securities Exchange Commission is in the process of investigating a possible securities law violation by Now Chemical. The SEC has not yet proposed a penalty assessment. Now's fiscal year ends on December 31, 2024, and its financial statements are published in March 2025. Management feels an assessment is reasonably possible, and if an assessment is made, an unfavorable settlement of $13 million is probable. What, if any, action should Now take for its financial statements?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 5C: It is February 16, 2020, and you are auditing Davenport Corporation's financial statements for 2019...

See similar textbooks

Similar questions

Dinoco Petroleum faces three potential contingency situations, described below. Dinoco's fiscal year ends December 31, 2024, and it issues its 2024 financial statements on March 15, 2025. 1. In the initial trial in October, Dinoco lost a $126 million lawsuit resulting from a dispute with a supplier. Although Dinoco feels it is probable it will have to pay the full amount, the case is under appeal at the end of the year. Dinoco does not expect the case to have a material adverse effect on the company. 2. In November 2023, the state of Texas filed suit against Dinoco, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On January 12, 2025, Dinoco reached a settlement with state authorities. Based upon discussions with legal counsel, it is probable Dinoco will require $146 million to cover the cost of violations. 3. Dinoco is the plaintiff in a $260 million lawsuit filed against a customer for damages due to lost profits from…
Dinoco Petroleum faces three potential contingency situations, described below. Dinoco’s fiscal year ends December 31, 2021, and it issues its 2021 financial statements on March 15, 2022. Required: Determine the appropriate means of reporting each situation for the year ended December 31, 2021, and record any necessary entries. Explain your reasoning. 1. In the initial trial, Dinoco lost a $130 million lawsuit resulting from a dispute with a supplier. The case is under appeal. Although Dinoco is unable to predict the outcome, it does not expect the case to have a material adverse effect on the company. 2. In November 2020, the state of Texas filed suit against Dinoco, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On January 12, 2022, Dinoco reached a settlement with state authorities. Based upon discussions with legal counsel, it is probable that Dinoco will require $150 million to cover the cost of violations. 3. Dinoco…
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern's fiscal year ends December 31, and the 2021 financial statements are issued on March 15, 2022 a Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2022, judgment was rendered against Eastern in the amount of $111 million plus interest, a total of $126 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 2020, 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, 2022, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $144 million will be required to cover the cost of violations. Eastern believes that…
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2021 financial statements are issued on March 15, 2022. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2022, judgment was rendered against Eastern in the amount of $117 million plus interest, a total of $132 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. In November 2020, 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, 2022, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $150 million will be required to cover the cost of violations. Eastern believes that the…
On March 15, 2022, MOSCOW received a court decision on a lawsuit filed against the company in January 2021. As of December 31, 2021, MOSCOW did not recognize a liability as a result of this case because according to its legal counsel, it was not probable that the company will be found liable. On March 15, the court ordered MOSCOW to pay the amount of P2 million to the plaintiff. Although MOSCOW intended to make an appeal, it is still considered probable that it will pay an amount between P1.5 million to P2 million, with P2 million considered to be the most probable amount. MOSCOW's financial statements for the year ended December 31, 2021 were authorized for issue on April 30, 2022. How much is the estimated liability for damages to be reported by MOSCOW on its statement of financial position at December 31, 2021? *
Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern's fiscal year ends December 31, and the 2021 financial statements are issued on March 15, 2022. a. Eastern is involved in a lawsuit resulting from a dispute with a supplier On February 3, 2022, judgment was rendered against Eastern in the amount of $111 million plus interest, a total of $126 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 2020, 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, 2022, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $144 million will be required to cover the cost of violations. Eastern believes that…
Eastern Manufacturing is involved with several situations that possible involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2021 financial statements are issued on March 15, 2022. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2022, judgment was rendered against Eastern in the amount of $124 million plus interest, a total of $139 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. In November 2020, the State of Nevada filed suit against Easter, seeking civil penalties and injunctive relief for violations of upon discussions with legal counsel, the Company feels it is probable that $157 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. Eastern is the plaintiff in a $217…
Which required SEC filing would contain the following content? "Our auditors identified the following critical audit matter: The Company recorded $219.4 million as of December 31, 2020 in reserves for returns, allowances, markdowns and discounts within customer refund liability." Question 33 options: a) Proxy b) 10-K c) 8-K
Authors Academic Press faces three potential contingency situations, described below. Authors’ fiscal year ends December 31, 2021. In August 2021, a worker was injured in an accident, partially as a result of his own negligence. The worker has sued the company for $1.14 million. Legal counsel believes it is reasonably possible that the outcome of the suit will be unfavorable, and that the settlement would cost the company from $285,000 to $570,000. A suit for breach of contract seeking damages of $2,700,000 was filed by an author on October 4, 2021. Legal counsel believes an unfavorable outcome is probable. A reasonable estimate of the award to the plaintiff is between $1.35 million and $2.025 million. No amount within this range is a better estimate of potential damages than any other amount. Authors is the plaintiff in a pending court case. Its lawyers believe it is probable that Authors will be awarded damages of $2.7 million. Required: Determine the appropriate means…
During 2020 Hingalo Company experienced financial difficulties and is likely to default on a P500,000, 15%, three-year note dated January 1, 2019, payable to Maawain National Bank. On December 31, 2020, the bank agrees to settle the note and unpaid interest of P75,000 for 2020 for P50,000 cash and marketable securities carried at P385,000. What amount should Hingalo report as a gain from extinguishment of debt in its 2020 income statement?
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 $118 million plus interest, a total of $133 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 $151 million will be required to cover the cost of violations. Eastern believes that…
The audit team is preparing to conduct its 2020 audit for ABC Company LLC. However, the audit team has not received its audit fees from ABC Company for its 2019 audit. The audit team might be tempted to issue a favorable report so that the company is able to secure a loan to settle the fees outstanding for their 2019 audit. Which threat may occur as a result of the financial or other interests of a professional accountant or of an immediate or close family member? O Self-interest threats Familiarity threats O Advocacy threats O Self-review threats