Burger Baby restaurants engaged Air Advertising to fly an advertisement above the Connecticut beaches

9-4A. Types of Contracts. Burger Baby restaurants engaged Air Advertising to fly an advertisement above the Connecticut beaches. The advertisement offered $1,000 to any person who could swim from the Connecticut beaches to Long Island in less than a day. At 10:00 a.m. on October 10, Air Advertising’s pilot flew a sign above the Connecticut beaches that read: “Swim across the Sound and Burger Baby pays $1,000.” On seeing the sign, Davison dived in. About four hours later, when he was the about halfway across the Sound, Air Advertising flew another sign over the Sound that read: “Burger Baby revokes”. Davison completed the swim in another six hours. Is there a contract between Davison and Burger Baby? Can Davison recover anything? Why or why not?


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An Alfalfa co-op has an agreement with its farmers to purchase alfalfa at a price that is currently 5% above the existing market price

15-37 (Accounting Estimates) An Alfalfa co-op has an agreement with its farmers to purchase alfalfa at a price that is currently 5% above the existing market price. In addition, the co-op has agreed to pay the farmers interest at 2% for each month delivery is delayed beyond December 31, 2009. Management expects that at least 14,500 tons will be delivered sometime after the balance sheet date.

Required
A. What factors should be considered in making an estimate of the loss accrual?
B. Assuming the amount of the purchase commitment is material, what information should management disclose in the footnotes to the financial statements concerning this purchase commitment?


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