The Following Selected Transactions Relate to Contingencies of Bowe-Whitney Inc

question 21

Essay

The following selected transactions relate to contingencies of Bowe-Whitney Inc. Bowe-Whitney's fiscal year ends on December 31, 2013, and financial statements are published in March 2014.
1. Bowe-Whitney is involved in a lawsuit resulting from a dispute with a customer over a 2013 transaction. At December 31, attorneys advised that it was probable that Bowe-Whitney would lose $3 million in an unfavorable outcome. On February 12, 2014, judgment was rendered against Bowe-Whitney in the amount of $14 million plus interest, a total of $15.2 million. Bowe-Whitney does not plan to appeal the judgment.
2. Since August of 2013, Bowe-Whitney has been involved in labor disputes at two of its facilities. Negotiations between the company and the unions have not produced a settlement and, since January 2013, strikes have been ongoing at these facilities. It is virtually certain that material costs will be incurred but the amount of resultant costs cannot be adequately predicted.
3. Bowe-Whitney is the defendant in a lawsuit filed in January 2014 in which Access Company seeks $10 million as an adjustment to the purchase price related to the sale of Bowe-Whitney's hardwood division in 2013. The lawsuit alleges that Bowe-Whitney misrepresented the division's assets and liabilities. Legal counsel advises that it is reasonably possible that Bowe-Whitney could lose $5 million, but that it's extremely unlikely it could lose the $10 million asked for.
4. At March 1, 2014, the EPA is in the process of investigating the possibility of environmental violations at one of Bowe-Whitney's sites, but has not proposed a penalty assessment. Management feels an assessment is reasonably possible, and if an assessment is made, a settlement of up to $33 million is probable.
Required:
Prepare journal entries that should be recorded as a result of each of the above contingencies.

Understand the characteristics, difficulties, and legal requirements related to learning disabilities.

Identify common problems associated with learning disabilities.

Recognize the aspects of intelligence and academic performance in children with learning disabilities.

Understand the distinctions between intrinsic and extrinsic motivation and their impacts on education.

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Definitions:

Accounting Profits

The total revenues of a business minus the explicit costs, essentially the net income on the financial statements.

Total Revenue

The total income received by a firm from its sales of goods or services, calculated as the quantity sold multiplied by the selling price.

Barriers to Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business.

Short Run

A time period in economics during which some factors of production are fixed, influencing decisions on production and costs.