51. On March 1, year 1, a suit was filed against Dean Company for patent infringement. Dean’ s legal counsel believes an unfavorable outcome is probable, and estimates that Dean will have to pay between $ 500,000 and $ 900,000 in damages. However, Dean’ s legal counsel is of the opinion that $ 600,000 is a better estimate than any other amount in the range. The situation was unchanged when the December 31, year 1 financial statements were released on February 24, year 2. How much of a liability should Dean report on its balance sheet at December 31, year 1 in connection with this suit?
52. How would the amortization of premium on bonds payable affect each of the following?
53. Ace Corp. entered into a troubled debt restructuring agreement with National Bank. National agreed to accept land with a carrying amount of $ 75,000 and a fair value of $ 100,000 in exchange for a note with a carrying amount of $ 150,000. Disregarding income taxes, what amount should Ace report as a gain on restructuring the debt?
54. Ray Finance, Inc. issued a 10-year, $ 100,000, 9 % note on January 1, year 1. The note was issued to yield 10 % for proceeds of $ 93,770. Ray did not elect the fair value option to report financial liabilities. Interest is payable semiannually. The note is callable after 2 years at a price of $ 96,000. Due to a decline in the market rate to 8 %, Ray retired the note on December 31, year 6. On that date, the carrying amount of the note was $ 94,582, and the discounted market rate was $ 105,280. What amount should Ray report as gain( loss) from retirement of the note for the year ended December 31, year 6?
55. Snelling Co. did not record an accrual for a contingent loss, but disclosed the nature of the contingency and the range of the possible loss. How likely is the loss?
56. On June 1 of the current year, Cross Corp. issued $ 300,000 of 8 % bonds payable at par with interest payment dates of April 1 and