Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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PLEASE HELP ME WITH THIS ACCOUNTING PROBLEM
Transcribed Image Text:Current Attempt in Progress
Splish Corporation, in preparation of its December 31, 2025, financial statements, is attempting to determine the proper accounting
treatment for each of the following situations.
1.
2.
3.
As a result of uninsured accidents during the year, personal injury suits for $727,000 and $127,600 have been filed against
the company. It is the judgment of Splish's legal counsel that an unfavorable outcome is unlikely in the $127,600 case but that
an unfavorable verdict approximating $541,800 (reliably estimated) will probably result in the $727,000 case.
Splish owns a subsidiary in a foreign country that has a book value of $5,237,000 and an estimated fair value of $10,205,200.
The foreign government has communicated to Splish its intention to expropriate the assets and business of all foreign
investors. On the basis of settlements other firms have received from this same country, Splish expects to receive 50% of the
fair value of its properties as final settlement.
Splish's chemical product division consisting of five plants is uninsurable because of the special risk of injury to employees and
losses due to fire and explosion. The year 2025 is considered one of the safest (luckiest) in the division's history because no
loss due to injury or casualty was suffered. Having suffered an average of three casualties a year during the rest of the past
decade (ranging from $63,800 to $741,200), management is certain that next year the company will probably not be so
fortunate.
(a) Prepare the journal entries that should be recorded as of December 31, 2025, to recognize each of the situations above. (If no entry
is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is
entered. Do not indent manually. List all debit entries before credit entries.)
No.
Date
Account Titles and Explanation
December
1.
31, 2025
2.
3.
December
31, 2025
December
31, 2025
eTextbook and Media
Debit
Credit
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