Which of the following statements about WorldCom is true? a. WorldCom filed for Chapter 11 bankruptcy in 2002. b. They overreported the line costs by recording them as liabilities. c. It began in 1999 as Long Distance Discount Services, Inc. d. Five techniques were used to cook its books.
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Which of the following statements about WorldCom is true?
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- A. What is the amount of the provision that should be provided for by the company in accordance with IAS 37 based on the scenarios below? i. Somerset Deliveries Plc is an outsourcing company that does deliveries for Several other companies. The company is being sued by a customer for $ 500 000 for breach of contract over a cancelled order. The company has obtained legal opinion that there was a 20% chance that the company will lose the case. Accordingly, the company has made a provision of $100 000 ($500 000 ×20%) in respect of the claim. The unrecoverable legal costs of defending the action are estimated at $50 000.These costs have not been provided for as the case will not go to court until the following year.…Novak Manufacturing has old equipment that cost $51,000. The equipment has accumulated depreciation of $27,900. Novak has decided to sell the equipment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) What entry would Novak make to record the sale of the equipment for $26,000 cash? (b) What entry would Novak make to record the sale of the equipment for $15,000 cash?GINGERBREAD Company is involved in a litigation regarding a faulty product sold in a prior year. The entity has consulted with lawyer and determined that there is a 50% chance of losing. The lawyer estimated that the amount of any payment would be between ₱500,000 to ₱800,000 with ₱500,000 as the best estimate. What is the required journal entry as a result of this litigation? * a. No journal entry is required b. Debit Litigation expense and credit Litigation liability for ₱ 500,000 c. Debit Litigation expense and credit Litigation liability for ₱ 250,000 d. Debit Litigation expense and credit Litigation liability for ₱ 650,000
- Sandhill Corporation operates several stores in British Columbia (Vancouver, Victoria, Kamloops, Penticton, and Prince George). The restructuring of its organization on November 20, 2023, has led to the decision to sell its Prince George store. In preparing financial statements at December 31, 2023, the following information was made available: 1. 2. 3. 4. 5. The Prince George operation incurred a loss of $286,300 for the 2023 calendar year, including $227,250 for the period January 1 to November 20, 2023. Estimated costs to sell are $305,000. At December 31, 2023, the fair value of the Prince George assets is estimated at $7.220 million and the carrying amount is $7.525 million. The combined provincial and federal income tax rate is 30%. It is estimated that the operation will lose an additional $252,500 before it is sold.When the Beacon Computer Company filed for bankruptcy under CCAA, it had the following balance sheet information: Liquidating Value claims Trade credit $ 6,400 Secured mortgage notes 9,600 Senior debentures 11,600 Junior debentures Total assets $30,100 Equity 16,600 -14,100 Assuming there are no legal fees associated with the bankruptcy, as a trustee, what distribution of liquidating value do you propose? (Do not leave any empty spaces; input a O wherever it is required. Omit "$" sign in your response.) Distribution of liquidating value Trade credit Secured mortgage notes Senior debentures Junior debentures Equity $Identify the accounting assumption, accounting principle, or reporting constraint that most appropriately justifies these procedures and practices. Use only one item per description. Choices: a. Full disclosure principle b. Time period assumption c. Materiality constraint d. Cost principle e. Revenue recognition principle f. Conservatism constraint g. Matching principle h. Economic entity assumption i. Monetary unit j. Going concern k. some other answer
- Peleton experienced a product recall on their treadmills. The company is currently in the middle of a lawsuit. It is probable that the company will lose the lawsuit due to injuries sustained from the treadmill use. The company cannot reasonably estimate the amount of their future obligation under the lawsuit. How should the company treat the lawsuit in their financial statements? Record as a liability on the balance sheet Stop selling more treadmills Disclose in the notes to the financial statements Ignore, not enough information is givenAyayai Company has an old factory machine that cost $63,000. The machine has accumulated depreciation of $35,280. Ayayai has decided to sell the machine. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) What entry would Ayayai make to record the sale of the machine for $32,280 cash? (b) What entry would Ayayai make to record the sale of the machine for $22,280 cash? No. Account Titles and Explanation Debit Credit (a) enter an account title to record the first transaction enter a debit amount enter a credit amount enter an account title to record the first transaction enter a debit amount enter a credit amount enter an account title to record the first transaction enter a debit amount enter a credit amount enter an account title to record the first transaction enter a debit…When the Beacon Computer Company filed for bankruptcy under CCAA, it had the following balance sheet information: Liquidating Value Claims Trade credit $ 6,700 Secured mortgage notes 9,900 Senior debentures 11,900 Junior debentures Total assets $30,400 Equity 16,900 -15,000 Assuming there are no legal fees associated with the bankruptcy, as a trustee, what distribution of liquidating value do you propose? (Do not leave any empty spaces; input a O wherever it is required. Enter the answers in dollars. Omit $ sign in your response.) Trade credit Secured mortgage notes Senior debentures Junior debentures Equity Distribution of liquidating value
- Determine if the following situation should be : BOOKED as a Liability, DISCLOSED in the notes of the financial statements, or NO ACTION needed. A produce company is being sued for selling bad spinach and causing hospitalization for some customers. The Company's legal team determined their negligence most likely (probably) will result in a loss of the lawsuit and damages of approximately $300,000. No Action Disclosed in the notes O Booked as a liabilityTop Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable estimated to cost the company $4 million. The fiscal year ends on December 31.Required:1. Should this contingent liability be reported, disclosed in a note only, or neither? Explain.2. What loss, if any, should Top Sound report in its 2021 income statement?3. What liability, if any, should Top Sound report in its 2021 balance sheet?4. What entry, if any, should be recorded?Kelly Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be P 500,000. What is the required journal entry as a result of this litigation? *a. Debit Litigation Expense for P 500,000 and credit Litigation liability for P 500,000b. No journal entry is requiredc. Debit Litigation Expense for P 200,000 and credit Litigation Liability for P 200,000d. Debit Litigation Expense for P 300,000 and credit Litigation Liability for P 300,000
