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Chapter 13: Current Liabilities and Contingencies

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Intermediate Accounting (Kieso)
Pages: 658 - 717

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212 Questions for Chapter 13: Current Liabilities and Contingencies

  1. Scorcese Inc. is involved in a lawsuit at December 31, 2017. (a) Prepare the December 31 entry assuming it is probable that Scorcese will be liable for $900,000 as a result of this suit. (b) Prepare the December 31 entry, if any, assuming it is not probable that Scorcese will be liable for any payment as a result of this suit.

    Found on Page 692
  2. Fairbanks Corporation purchased 400 ordinary shares of Sherman Inc. as a trading investment for $13,200. During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman shares were selling for $34.50 per share. Prepare Fairbanks’ journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment

    Found on Page 658
  3. (Loss Contingencies: Entries and Essay) On November 24, 2017, 26 passengers on Windsor Airlines Flight No. 901 were injured upon landing when the plane skidded off the runway. Personal injury suits for damages totalling $9,000,000 were filed on January 11, 2018, against the airline by 18 injured passengers. The airline carries no insurance. Legal counsel has studied each suit and advised Windsor that it can reasonably expect to pay 60% of the damages claimed. The financial statements for the year ended December 31, 2017, were issued February 27, 2018.

    Found on Page 701
  4. Use the information from IFRS17-10 but assume the shares were purchased to meet a non-trading regulatory requirements. Prepare Fairbanks' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment.

    Found on Page 658
  5. Question: (Equity Securities—Statement Presentation) Fernandez Corp. invested its excess cash in securities during2017. As of December 31, 2017, the securities portfolio consisted of the following common stocks.

    Found on Page 658
  6. (Loss Contingencies: Entries and Essays) Polska Corporation, in preparation of its December 31, 2017, financial statements, is attempting to determine the proper accounting treatment for each of the following situations.

    Found on Page 701
  7. (a) Assuming no Fair Value Adjustment account balance at the beginning of the year, prepare the adjusting entry at the end of the year if Laura Company’s available-for-sale debt securities have a fair value of $60,000 below cost.

    Found on Page 658
  8. Calaf’s Drillers erects and places into service an off-shore oil platform on January 1, 2018, at a cost of $10,000,000. Calaf is legally required to dismantle and remove the platform at the end of its useful life in 10 years. Calaf estimates it will cost $1,000,000 to dismantle and remove the platform at the end of its useful life in 10 years. (The fair value at January 1,2018, of the dismantle and removal costs is $450,000.) Prepare the entry to record the asset retirement obligation

    Found on Page 658
  9. Eddie Zambrano Corporation began operations on January 1, 2017. During its first 3 years of operations, Zambrano reported net income and declared dividends as follows.

    Found on Page 658
  10. On January 1, 2017, Roosevelt Company purchased 12% bonds, having a maturity value of $500,000, for $537,907.40.

    Found on Page 658

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