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enicol1000
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in terms of GAAP? Discuss the appropriateness of the journal entries in terms of GAAP.
1. The company is being sued for $500,000 by a customer who claims damages for personal injury apparently caused by a defective product. Company attorneys feel extremely confident that the company will have no liab for damages resulting from the situation. But, the company decides to make the following entry.
Loss from Lawsuit 500,000
Liab for Lawsuit 500,000
2. Because the general level of prices increased during the current year, Fresh Horses, Inc. determined that there was a $16 understatement of dep exp on its equip and decided to record it in its a/c. The ff entry was made.
Dep Exp16
Acc Dep 16
5. F H, Inc. has been concerned about whether intangible assets could generate cash in case of liquidat+. As a consequence, goodwill arising from a purchase transact+ during the current yr and recorded at $800 was written of as ff.
Ret Earnings 800
Goodwill 800
1. The company is being sued for $500,000 by a customer who claims damages for personal injury apparently caused by a defective product. Company attorneys feel extremely confident that the company will have no liab for damages resulting from the situation. But, the company decides to make the following entry.
Loss from Lawsuit 500,000
Liab for Lawsuit 500,000
2. Because the general level of prices increased during the current year, Fresh Horses, Inc. determined that there was a $16 understatement of dep exp on its equip and decided to record it in its a/c. The ff entry was made.
Dep Exp16
Acc Dep 16
5. F H, Inc. has been concerned about whether intangible assets could generate cash in case of liquidat+. As a consequence, goodwill arising from a purchase transact+ during the current yr and recorded at $800 was written of as ff.
Ret Earnings 800
Goodwill 800