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 $113 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 $133 million to cover the cost of violations. 3. Dinoco is the plaintiff in a $130 million lawsuit filed against a customer 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 Dinoco will prevail and be awarded $65 million. Required: Determine the contingent amount Dinoco would report in each situation for the year ended December 31, 2024. Note: Enter your answers in dollars, not in millions (i.e. $5.5 million should be entered as 5,500,000). 1. Contingent amount 2. Contingent amount 3. Contingent amount $113,000,000
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 $113 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 $133 million to cover the cost of violations. 3. Dinoco is the plaintiff in a $130 million lawsuit filed against a customer 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 Dinoco will prevail and be awarded $65 million. Required: Determine the contingent amount Dinoco would report in each situation for the year ended December 31, 2024. Note: Enter your answers in dollars, not in millions (i.e. $5.5 million should be entered as 5,500,000). 1. Contingent amount 2. Contingent amount 3. Contingent amount $113,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 $113 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 $133 million to cover the cost of violations.
3. Dinoco is the plaintiff in a $130 million lawsuit filed against a customer 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 Dinoco will prevail and be awarded $65 million.
Required:
Determine the contingent amount Dinoco would report in each situation for the year ended December 31, 2024.
Note: Enter your answers in dollars, not in millions (i.e. $5.5 million should be entered as 5,500,000).
1. Contingent amount
2. Contingent amount
3. Contingent amount
$113,000,000
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