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A long-term debt maturing currently, which is to be converted
into common stock
A long-term debt maturing currently, which is to be paid with
current assets
Question 5. (TCO D) Jeff Beck is a farmer who owns land that
borders on the right-of-way of the Northern Railroad. On August
10, 2010, due to the admitted negligence of the railroad, hay on the
farm was set on fire and burned. Beck had had a dispute with the
railroad for several years concerning the ownership of a small
parcel of land. The representative of the railroad has offered to
assign any rights the railroad may have in the land to Beck in
exchange for a release of his right to reimbursement for the loss he
has sustained from the fire. Beck appears inclined to accept the
railroad's offer. The railroad's 2010 financial statements should
include the following related to the incident:
recognition of a loss and creation of a liability for the value of
the land.
recognition of a loss only.
creation of a liability only.
disclosure in note form only.