Review the Note Disclosure of Legal Matters

question 120

Essay

Review the Note Disclosure of Legal Matters.
REQUIRED:
1 If you were to make an entry for the lawsuit against Company, what monetary amount should be recorded? On what did you base your decision with regard to the amount?
2 Does the disclosure imply that the Company is involved in only this litigation at this time?
3 Why did this lawsuit arise? Do you believe it to be a reasonable one or do you think that the plaintiff, has little grounds for this lawsuit?

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Definitions:

Equivalent Units

Equivalent units refer to a conversion measure used in cost accounting to express the amount of work done by manufacturers on units that are only partially completed at the end of an accounting period.

Process Costing System

An accounting methodology used in manufacturing, where costs are assigned to processes or departments and averaged over the units produced, suitable for homogeneous products.

Lumber Mill

A facility where logs are cut, planed, and processed into lumber and other wood products for construction and manufacturing.

Process Cost System

An accounting method used to track costs associated with producing homogenous products in continuous processes.