Lincoln Chemicals became involved in investigations by the U.S. Environmental Protection Agency in regard to damages connected to waste disposal sites

P 13-9 Subsequent events

Lincoln Chemicals became involved in investigations by the U.S. Environmental Protection Agency in regard to damages connected to waste disposal sites. Below are four possibilities regarding the timing of (A) the alleged damage caused by Lincoln, (B) an investigation by the EPA, (C) the EPA assessment of penalties, and (D) ultimate settlement. In each case, assume that Lincoln is unaware of any problem until an investigation is begun. Also assume that once the EPA investigation begins, it is probable that a damage assessment will ensue and that once an assessment is made by the EPA, it is reasonably possible that a determinable amount will be paid by Lincoln.

Required:
For each case, decide whether (a) a loss should be accrued in the financial statements with an explanatory note, (b) a disclosure note only should be provided, or (c) no disclosure is necessary.


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Puckett Co. has office furniture that cost $75,000 and that has been depreciated $50,000

Problem 10-6A (P10-6A) Puckett Co. has office furniture that cost $75,000 and that has been depreciated $50,000. Record the disposal under the following assumptions
(a) it was scrapped as having no value
(b) it was sold for 21,000
(c) it was sold for $31,000

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