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Unformatted text preview: MEMORANDUM Date: 09/14/2011 To: Files – American Chemical Corporation From: Venk Seelam Issue: How should ACC deal with a contingent asset expected from an involuntary condemnation of its chemical plant properties? Recommendation: American Chemical Corporation should Sources : See attached research table Discussion: This memo will discuss the accounting standards and adjustments for accruing and disclosing the condemnation award for American Chemical Corporation (ACC). Mr. Molina and the management team chose not to disclose the condemnation award in the lower court’s trial decision; this violates the FASB accounting standards. On November 201, 2010, the court awarded ACC a condemnation award of $60 Million based on appraised fair market value. This award exceeded ACC’s then carrying value of such properties by $35 million. While the higher court will likely sustain the trial court’s award, ACC’s external legal counsel has advised that there is a reasonable possibility that the higher court may reduce the award to...
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This note was uploaded on 11/02/2011 for the course ACCOUNTING 300 taught by Professor Rodhurd during the Fall '11 term at Golden Gate.
- Fall '11