Chapter 13 - Test Bank 205 - 140 Barone Inc is involved...

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140. Barone, Inc. is involved with several situations that possibly involve contingencies. Each is described below. Barone's fiscal year ends December 31, and the 2013 financial statements are issued on March 1, 2014. 1. At March 1, 2014, the EPA is in the process of investigating possible chemical leaks at two of Barone's facilities, but has not proposed a deficiency assessment. Management feels an assessment is reasonably possible, and if an assessment is made an unfavorable settlement of up to $8 million is reasonably possible. 2. Barone is the plaintiff in a $33 million lawsuit filed against Faze Corp. for damages due to lost profits from rejected contracts and for unpaid receivables. The case is in final appeal and legal counsel advises that it is probable that Finley will prevail and be awarded $25 million. 3. In July 2012, the State of Arkansas filed suit against Barone, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On February 12, 2014, Barone reached a settlement with state authorities. Based upon discussions with
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