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Unformatted text preview: the fine. Part 2: disclosure note is needed to explain the detail of the accrual. Date Account Debit Credit Dec-08 Litigation expense 140,000,000 Litigation liability 140,000,000 Section C: Part 1: Gains on litigation are not to be accrued and are only realized after the ultimate decision has been made. Even though Eastern is in the final appeal stage the gain should only be recognized when the final judgment is made. Part 2: A disclosure note should be placed in the financial statements minus any “misleading information that could show likely hood of the realization. Section D: Part 1: Since the assessment has not yet been proposed, following the two-step process, the company should not report anything because the assessment is only reasonable possible and not probable. Part 2:No journal entries or disclosure notes are needed....
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This note was uploaded on 02/24/2010 for the course ACCT 311 taught by Professor Seese during the Spring '10 term at Old Dominion.
- Spring '10