clause. In Nilo’ s December 31, year 2 financial statements, for which the auditor’ s fieldwork was completed in April year 3, how should this casualty be reported?
87. Grim Corporation operates a plant in a foreign country. It is probable that the plant will be expropriated. However, the foreign government has indicated that Grim will receive a definite amount of compensation for the plant. The amount of compensation is less than the fair market value but exceeds the carrying amount of the plant. The contingency should be reported
88. In determining whether to accrue employees’ compensation for future absences, one of the conditions that must be met is that the employer has an obligation to make payment even if an employee terminates. This an example of a( n)
89. On October 1, year 1, Fleur Retailers signed a 4-month, 16 % note payable to finance the purchase of holiday merchandise. At that date, there was no direct method of pricing the merchandise, and the note’ s market rate of interest was 11 %. Fleur recorded the purchase at the note’ s face amount. All of the merchandise was sold by December 1, year 1. Fleur’ s year 1 financial statements reported interest payable and interest expense on the note for 3 months at 16 %. All amounts due on the note were paid February 1, year 2. Fleur’ s year 1 cost of goods sold for the holiday merchandise was
90. Verona Co. had $ 500,000 in short-term liabilities at the end of the current year. Verona issued $ 400,000 of common stock subsequent to the end of the year, but before the financial statements were issued. The proceeds from the stock issue were intended to be used to pay the short-term debt. What amount should Verona report as a short-term liability on its balance sheet at the end of the current year?
91. Strand, Inc. provides an incentive compensation plan under which its president receives a bonus equal to 10 % of the corporation’ s income in excess of $ 200,000 before income tax but after deduction