are incurred exactly as estimated, what journal entries would be made
relative to the following facts? (a)Sale of machinery and warranty
expense incurred in 2017. (b)Warranty accrual on December 31, 2017.
(c)Warranty costs incurred in 2018. (d)What amount, if any, is disclosed
in the balance sheet as a liability for future warranty costs as of
December 31, 2017? P13-11 (LO3) WRITING (Loss Contingencies:
Entries and Essays) Polska Corporation, in preparation of its December
31, 2017, financial statements, is attempting to determine the proper
accounting treatment for each of the following situations. 1. As a result
of uninsured accidents during the year, personal injury suits for
$350,000 and $60,000 have been filed against the company. It is the
judgment of Polska's legal counsel that an unfavorable outcome is
unlikely in the $60,000 case but that an unfavorable verdict
approximating $250,000 will probably result in the $350,000 case.
2.Polska owns a subsidiary in a foreign country that has a book value of
$5,725,000 and an estimated fair value of $9,500,000. The foreign
government has communicated to Polska 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, Polska expects to
receive 40% of the fair value of its properties as final settlement.
3.Polska'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 2017 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 $60,000 to
$700,000), management is certain that next year the company will
probably not be so fortunate. Instructions (a)Prepare the journal entries
that should be recorded as of December 31, 2017, to recognize each of
the situations above. (b)Indicate what should be reported relative to each
situation in the financial statements and accompanying notes. Explain
why. CA13-3 WRITING (Refinancing of Short-Term Debt)
DumarsCorporation reports in the current liability section of its balance
sheet at December 31, 2017 (its year-end), short-term obligations of
$15,000,000, which includes the current portion of 12% long-term debt