...attorneys believe that the losses could amount anywhere in the range of $1 million and $3 million, with no amount in the range more likely than the next. Issues 1. Is the lawsuit considered a loss contingency? 2. Will the loss be accrued, and if so for what amount? 3. What disclosures should be made in the company’s financial Statement? Analysis – Issue 1: Is the lawsuit considered a loss contingency? FASB Accounting Standards (ASC) 450-20 provides information on contingencies, covering the definition of a loss contingency as well as providing examples of loss contingencies. Contingencies are described in (ASC) 450-20-20 as follows: Contingency: An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur. As can be seen the company has an existing situation (lawsuit) involving uncertainty (estimated range of $1-3 million in damages) which could make it considered a contingency. FASB goes on to describe loss contingency as a “set of circumstances involving uncertainty as to possible loss”, making this a loss contingency. FASB Accounting Standards Codification (ASC) 450-20 provides examples of different types of loss contingencies in par. 05-10 05-10 The following are examples of loss contingencies that are discussed in this subtopic. a. Injury or damage caused by products...
Words: 1343 - Pages: 6
...Question #1: It is believed that Danle’s decision to omit disclosure relating to the class-action litigation was not appropriate for the fiscal year ended December 31, 2009. This conclusion was reached because both litigations were determined to not be “probable” and thus need not be accrued for (as required by ASC 450-20-25-2), yet Danle’s legal counsel concluded that the litigation could “potentially but not probably” cause a future loss. The use of the word “potentially” can be reasonable assumed to mean reasonably possible, which is defined as more than remote but less than probable. ASC 450-20-50-3 states, “Disclosure of a contingency shall be made if there is at least a reasonable possibility that a loss or an additional loss may have been incurred,” and “an accrual is not made for a loss contingency because any of the conditions in paragraph 450-20-25-2 are not met.” As previously stated no accrual was made because the litigations were not considered probable, however the language used by Danle’s legal counsel to describe the litigation was interpreted to mean reasonably possible. Therefore ASC 450-20-50-3 applies and proper disclosure is needed for the financial statements of fiscal year December 31, 2009. As additional proof ASC 450-20-50-5 clearly states, “Disclosure is preferable to accrual when a reasonable estimate of loss cannot be made. For example, disclosure shall be made of any loss contingency that meets the condition in paragraph 450-20-25-2(a) but that is...
Words: 1183 - Pages: 5
...Behaviour” Course Instructor Dr. Hardik Shah Adani Institute of Infrastructure Management Date: 22/08/2011 Submitted By: Deepesh Vaishanava,Gyan Prakash,Jyoti Shanker Pandey, Neeraj Mehra,Raja Bhattacharjee,Ujjayini Chakraborty. (Group IV) Page 1 of 11 Question 1: What is the key learning for you as leader? Answer: All 12 jurors had their own understanding and rationale behind their actions. Information sharing and consensus building is important to make the decision. Every member is a potential contributor to the process of decision making, which involves understanding the problem, breaking it down to meaningful components, formulating a general strategy in terms of a sequence of action steps, generating alternatives, providing and pooling the required information, generating favourable and unfavourable points for each alternative, coming to a shared understanding, making a final choice, and getting the commitment of all members to the choice made. The commitment of the jurors to the implementation of the solution is thus assured. In this case, the decision making style of the group was mainly a participative style. All the jurors proceeded through the entire decision making process. The role of leader (Juror 1) was that of a process facilitator. As the consequence of the decision made by the jurors was very serious (conviction of murder), it was very important for the decision to be made after ‘Deep Deliberation’. In this style, the person spends large amounts...
Words: 4083 - Pages: 17
...Managerial Assessment and Development-1 Bonita Hargrett Individual Assignment Unit #4 Contingency Leadership Theories Everest University Instructor: Jill Heaney November 11, 2014 Introduction In this assignment we were asked to read chapter #4 and Complete Review Questions 1-11 on page 138, and also answer question 1- 6 page 139-140 about Case on W. L. Gore. These answers will come from the finding I learn while reading this chapter about Individuals leadership traits or skills are lacking, characteristics of the subordinate, task, and organization can replace the need for a leader or neutralize the leader’s behavior. Plus the different personality traits that is needed and found in a great leader-Managers exchange and fellowship and how manager can be unethical with some followers and still be a team with people being faithful to their leader because of their relationship with them. Contingency Leadership Theories Review Questions 1-11 on page 138 1. What is the difference between a theory and a model? A model is the structure of a theory, so one is how you find the other, because the model is a short summary of the theory. 2. What contingency leadership variables are common to all of the theories? Situation, Leaders and Followers 3. How does the global economy relate to contingency leadership? Contingency leadership adjusts to any environment and culture, allowing the leader to deal with different...
Words: 546 - Pages: 3
...Preparing Project Budgets for Business Cases Technical guide The Secretary Department of Treasury and Finance 1 Treasury Place Melbourne Victoria 3002 Australia Telephone: +61 3 9651 5111 Facsimile: +61 3 9651 5298 www.dtf.vic.gov.au Authorised by the Victorian Government 1 Treasury Place, Melbourne, 3002 © Copyright State of Victoria 2012 This book is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. ISBN 978-1-922045-92-8 Published August 2012. If you would like to receive this publication in an accessible format please telephone 9651 0909 or email mailto:information@dtf.vic.gov.au Contents 1. Background 1 1.1 Context 1 1.2 Purpose – developing and managing project budgets 2 1.3 Scope of application 2 1.4 Structure of this guide 3 1.5 Related guides and frameworks 3 1.6 The need for an accurate project budget 4 2. Elements of a project budget 5 2.1 The headline elements of a project budget 5 2.2 Successful financial planning 9 2.3 The need for a whole-of-life approach 10 2.4 ‘Poor project planning’ risks are not project risks! 10 2.5 Delivering to budget 11 3. Foundations for good project budgets 12 3.1 Better business cases and better project budgets 12 ...
Words: 21569 - Pages: 87
...THEORY OF CONSTRAINTS PROJECT TIME MANAGEMENT IN MULTIPLE, CONCURRENT PROJECTS: INVESTIGATION OF ASSUMPTIONS REGRADING HUMAN BEHAVIOUR DURING PROJECT PLANNING J. C. Kago1 and P. J. Viljoen2 1 Masters in Project Management, Department of Engineering and Technology Management, University of Pretoria, Pretoria 002, South Africa. 2 Formerly Department of Engineering and Technology Management, University of Pretoria, Pretoria 002, South Africa. ABSTRACT CCPM has attempted to account for certain human behaviour patterns during project planning and execution which other time management techniques neglect. CCPM gives this human behaviour as a major influence on amount of contingency provided in activity duration estimates. The human behaviours however are assumptions and justification of CCPM relies heavily on these assumptions. The problem is that we do not know if the human behaviours assumed are an important influence on contingencies provided in activity duration estimates during project planning. The main objective of this research is therefore to determine, using empirical data how stakeholders in the construction industry rate the influence of human behaviour on contingency provided in activity duration estimates. Other factors that influence contingency provided have been identified and their relative importance investigated. 1.1 Introduction As competition increases, organisations survival will be determined by their ability to make...
Words: 5915 - Pages: 24
...4.0 Tutorials Practicals Credits 1.0 0.0 5.0 TextBooks Sr No T-1 Title Microeconomics Theory and Applications Reference Books Sr No R-1 R-2 R-3 Other Reading Sr No OR-1 OR-2 OR-3 OR-4 OR-5 OR-6 OR-7 Journals articles as Compulsary reading (specific articles, complete reference) Kwang Ng,Yew,Why Is a Financial Crisis Important? The Significance of the Relaxation of the Assumption of Perfect Competition,International Journal of Business and Economics,2009,Vol.8,No.2,91-114 , Roman Indrest and Tommasso Valletti,Price Discrimination in input markets,The Rand Journal of Economics,Vol. 40,No.1,Spring 2009,1-19 , Cordtz,Dan,Car wars: A global report on Auto Industry,FInancial World,August 22,1989;158,17;ABI/INFORM Global , S.k.Mishra,A Brief History of Production Functions,The IUP Journal of Managerial Economics,November,2010,Vol. VIII,No. 4,pp.6-34 , Monika Jain,Paradox of Plenty,with Special Reference to Inelastic Demand for Apples,The IUP Journal of Managerial Economics,May,2011,Vol. IX,No. 2,pp.4455 , Cathy Locke Bee Staff Writer. The Sacramento Bee ,"EID report reveals household water use on rise An analysis of supply, demand recommends holding off on meters" http://search.proquest.com/docview/246565304?accountid=80692 , Yeung; Vincent Mok,Regional monopoly and interregional and intraregional competition :The parallel trade in coca cola between shanghai and Hangzhou in China,Economic Geography; Jan 2006; 82, 1; ABI/INFORM Global,pp.89-109 , Title Managerial Economics Author Damodaran...
Words: 3278 - Pages: 14
...Development – 1 Individual Work Week- 4 Karrie Hartline 2/4/2014 Instructor Jill Heaney Everest University Online Brandon Campus Review Questions 1. What is the difference between a theory and a model? A theory begins with an idea or a set of ideas that sets out to prove or explain certain facts or events through evidence or experiments, however usually the evidence or experiment is weak and may not be able to be proven or verified to be true in all cases. Therefore it is determined to be a theory. A model is considered to be something that people follow or imitate, something individuals use as an example such as a formula in mathematics, directions in a recipe, plans for building a building, plans for meeting goals and objective even the way people learn patterns of behaviors. These examples are all types of models people follow in their everyday lives (Ahmad, 2011). Our text describes leadership theory as how situational variable interact with the leaders personalities and behaviors Fred E. Fiedler was the first to call this the contingency leadership theory in 1951 (Lussier, 2013, p. 115). Our text explains contingency model is usually used in determining a person’s leadership style whether their style is task oriented or relationship oriented to determine which situation leader-member relationship, task structure, or position power matches the leader’s particular style to maximize performance (Lussier, 2013, p. 51). 2. What contingency leadership...
Words: 807 - Pages: 4
...that help to set us apart from other area nursing homes. Serenity has a management team and a personnel team that differs a lot from the typical type of nursing facility. Serenity has a lot of milestones that it has to reach in order to be operating by its July 1, 2014 opening date. Serenity has to have a building inspected, equipment has to be ordered to accommodate the patients and their health care needs. Serenity has to purchase furniture, contact painters, movers, and interior designers to get the building in tip top shape. Interviews for upper administration positions and for the entire healthcare team will have to be performed. Employees have to be notified of employment after the review of applicants has taken place by the owner and the panel of interviewers. Budgets will need to be revamped for personnel and an employee orientation will take place. Please refer to the excel spreadsheet for the milestone schedule of important dates. Serenity has contingency plans in place for fire, flood, bomb threats, and blizzards. Fire contingency Plan In the event of a fire, the following contingency plan will be put into action. At the time that a fire is discovered, the following procedures should be followed: 1. Call 911 instantly and report the fire 2. Alert the division team leader in charge. 3. The...
Words: 724 - Pages: 3
...Case 13-08 overview M international (M) and W Inc (W) decided to enter a long term litigation, due to a patent rights violation. M being the demandant and W the respondent. Not enough information was provided in relation to the charges or the patent. To properly understand the events a chronological descripcion of the litigation is to be provided. Events: Problems to be addressed Is necessary to understand the proper and logical accounting literature to address the matter previously presented. The case it self provides a series of matters to be attends, these matters have to be address in accordance to the General Accepted Accounting Principles. Matters to be discussed: * The liability to be recorded by M financial statements, for the year-end December 31, 2007 * What adjustments should be done if any, for the year-ended December 31, 2009, financial statements; should the amount be recognized as a 2009 event or as a prior period adjustment. * When should M record a deduction of the previously recorded loss contingency Solution To understand the topic to be discussed is necessary to understand its basic components. FASB recognizes that companies are often involved in situations where uncertainty exists about whether an obligation will arise and an amount will be disbursed to fulfill or settle the obligation. This is known as a Contingency in the Accounting world. What is a contingency? ASC 450-10-20 defines it as “An existing condition...
Words: 1945 - Pages: 8
...chances of winning the law suit are remote. The estimated amount that Camp Industries will lose is 30 million. The company believes that a disclosure of the 30 million loss will be a target for the opposing legal counsel in the case. A colleague thinks that his company should hold off on recording the loss until a settlement has been reached. A contingency is an existing situation dealing with the possibility of a loss or gain to a company that will be a result from future events failing to occur. The chances of winning the case are remote which means Camp Industries is not likely to win the law suit. According to the standards of financial accounting and reporting states “An estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met: The amount of loss can be reasonably estimated and it is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss.” If no accrual is recorded for the contingency the financial statements could be very well misleading. A discloser should be made if the loss is estimated; if not then a discloser should be made stating that an estimate cannot be made. The ethical dilemma resulting from the case involves falsifying financial statements in order to avoid the documented disclosure of the loss from being exposed to the opposing party. This also is a creditability and integrity issue. No matter what a colleague suggests, you...
Words: 817 - Pages: 4
...|Topic in Mastery of the |Chapter 3 - Building Your |Chapter 4 – Brain Teasers: Using|Chapter 5 – Cases to Accompany | |Financial Accounting Research |Business Vocabulary: Defining |FARS to Untangle the Mystery |FARS [Related Assignments at End| |System (FARS) Through Cases 2nd |Terms and Solving Problems |[See Introduction and Example |of Cases] | |Edition by Wallace [Chapter 1 |Through FARS [See Introduction |pp. 4-1 to 4-7] | | |and 2 where noted] |and Example pp. 3-1 to 3-7] | | | |FASB, Standard Setting; GAAP; |Table 3.1 Accounting Standards; |1: How Many Standards Have Been |Case 12: Emerging Issues: The | |Governance; FARS [Chapter 1 – |Table 3.39 Regulated Industry; |Issued by FASB?; 2: Dissents |Agenda of FASB; [Case 8 Related:| |The Financial Accounting |Table 3.40 Specialized Industry |Portending Future?; 32: What |Does It Matter Where Guidance Is| |Research System (FARS) Primer.] |Considerations |Makes One GAAP Preferable to |Located?]; [Case 12 Related: Are| | | |Another?; 30: When Can Analogies|Accounting Rules to Blame?] | | | |Be Used?; 31: What Are the 10 | | | ...
Words: 2708 - Pages: 11
...10 (1993) 229-264 229 Elsevier Impacts of programmable manufacturing technology: A review of recent studies and contingency formulation Jeffrey K. Liker”, Ann Majchrzakb and Thomas Choi” “Industrial and Operations Engineering, University of Michigan, Ann Arbor, MI 48109, USA bZnstitute for Safety and Systems Management and Industrial and Systems Engineering, University of Southern California, Los Angeles, CA 90089, USA Abstract This paper reviews the literature on the social impacts of programmable manufacturing technology (PMT). Several perspectives on the social impact of technology are identified ranging from simple additive models that view technology as having a set of individual and independent causal impacts to a contingency perspective which views the impact of technology as dependent on technical and organizational characteristics. The paper statistically summarizes 30 empirical studies within the 1986-1990 period and finds common trends in findings as well as contradictory evidence. The common trends are that PMT tends to lead to more organic organizations, but also meets with negative employee attitudes, stress, and perceptions of reduced job security and mobility. The contradictory evidence is that most studies report simple, additive effects, while a substantial portion find that the impacts depend on a wide range of contingency variables. The authors argue that simplistic views of PMT as being a homogeneous set of technologies with unidirectional,...
Words: 14431 - Pages: 58
...Memo To: M International From: ------------------------------------------------- Re: Loss Contingency Recognition and Reversal Background The company has been engaged in a dispute over a long-standing litigation with W Inc. The dispute involves a specific patent infringement matter. In May 2007, W Inc. filed a claim against the company for patent infringement and management determined that a loss was probable and estimated it would be between $15 million and $20 million, with $17 million being the most likely amount of loss within the estimated range (December 31, 2007). In September 2009, a jury trial took place for the litigation involving the company and W Inc. A verdict for the trial was reached; a judgment was ordered that the company pay W Inc. $18.5 million on September 24, 2009. The company filed for a Notice of Appeal with the Court of Appeals in November 2009 and in December 2010, the Court of Appeals issued a ruling that reversed the previous order of $18.5 million to W Inc. W Inc. petitioned for a rehearing before the same panel of the Court of Appeals judges on January 6, 2011 against the company’s reversal, but the panel decided against the rehearing and declined W Inc.’s request. Management, along with in-house legal counsel, determined the matter with W Inc. was final on February 28, 2011. Issues 1. What amount should the company recognize as a liability for the year ending December 31, 2007? 2. Should the company adjust its liability if the actual...
Words: 973 - Pages: 4
...Contingencies 1. For the year-end December 31, 2007, financial statements, what amount should M record as a liability? For year-end December 31, 2007 M Company should accrue the liability in the amount of 17 million and disclose the liability in the notes of financial statements. M company should accrue the liability for the contingency and disclose the nature of the liability within the notes to the financial statements. This is in accordance with guidance under ASC 450-25-2, which stated, in part: An estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met: a. Information available before the financial statements are issues or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements. Date of the financial statements means the end of the most recent accounting period for which financial statements are being presented. It is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss. b. The amount of loss can be reasonably estimated. 2. For the year-end December 31, 2019, financial statements, should M adjust its liability? If so, what amount should be recorded; and should the amount of the adjustment be considered a 2009 event or a prior period adjustment. For year-end December 31, 2009 M Company...
Words: 474 - Pages: 2
