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For each of the following, determine the correct way to treat the situation: i.e. record in the books, disclosure required or no reporting needed and any amount that is to be reported or disclosed.

A, The likelihood of a payment occurring is probable, and the estimatd amount is $1.3 million

B, The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $1.1 million to $1.6 million.

C, The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.3 million.

D, The likelihood of a payment occurring is remote, while the estimated potential amount is $1.3 million.

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Elin Hessel
Elin HesselLv2
30 Sep 2019

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12. For each of the following, determine the correct way to treat the situation: i.e. record in the books, disclosure required or no reporting needed and any amount that is to be reported or disclosed.
a. The likelihood of a payment occurring is probable, and the estimated amount is $1.3 million
b. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $1.1 million to $1.6 million.
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13. Axel Inc offers its employees free medical, dental and life insurance coverage. It also matches employee contributions to a voluntary retirement plan dollar for dollar. Assume that no employee's wages exceed the relevant wage bases. Payroll information for the payroll period ending January 15 are below. Make the appropriate journal entries in good form to record the payroll.

Wages and salaries $2,750,000.00
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Panama Shirt Designs is a defendant in litigation involving an employee accident in its manufacturing plant.


For each of the following scenarios, determine the appropriate way to report the situation and record any necessary entry.

- The likelihood of a loss occurring is probable and the estimated loss is $650,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

- The likelihood of a loss occurring is probable and the loss is estimated to be in the range of $600,000 to $900,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

- The likelihood of a loss occurring is reasonably possible and the estimated loss is $650,000.

The likelihood of a loss occurring is remote, while the estimated potential loss is $650,000

Zeta, Ltd., a company that prepares its financial statements in accordance with IFRS, has the following pending items at December 31, 2014.

The company is the defendant in a product liability lawsuit as a result of injuries incurred by purchasers of its products. Legal counsel has indicated that an unfavorable verdict in the amount of $650,000 is probable.

The company is involved in another lawsuit and their legal counsel believes it is reasonably possible that the lawsuit will result in a loss of $175,000.

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c. Contingencies of $825,000 will be accrued and a provision of $150,000 will be accrued as a liability.

d. Contingencies of $800,000 will be accrued and a provision of $175,000 will be disclosed.

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