Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) You are the associate in law firm of Moose and Squirrel LLC. One of the firm's clients, ABC Transport, currently sent firm an audit letter. Letter asks firm to give information to ABC's auditor concerning a possible claim involving contract between ABC and Baddenoff Corporation ("Baddenoff."). Captain Peachfuzz, firm's billing partner for ABC, negotiated Baddenoff contract nine months ago. Captain Peachfuzz has asked you to suggest  him on audit response.

Contract needs ABC to transport valuable art to New York City for auction. ABC's most recent shipment was hit by train and art was totally destroyed. ABC didn't insure shipment as needed by contract. ABC has not yet reported accident to Baddenoff, so Baddenoff is not aware of possible breach.

Exact value of art is uncertain. Captain Peachfuzz thinks loss to Baddenoff could be from $1.1 million to $3.4 million, or even more. Though, contract gives for liquidated damages of $850,000 per shipment in event of  uninsured loss. If Baddenoff brings a claim, law of State of Vida will apply. Vida courts almost always enforce liquidated damages clauses, especially when injured party's actual damages exceed specified liquidated damages.

Captain Peachfuzz believes there is possible interpretation of contract that would only need insurance against theft, not accident. If this interpretation is accepted, ABC would not be in breach and would not be liable. When you asked Captain Peachfuzz about claim, he said, "Other side has good case. Our argument is a plausible interpretation of contract, but we are not probable to win on that argument." Captain Peachfuzz is pretty sure ABC will sue when it discover out about accident.

Describe what information Captain Peachfuzz may give to auditor about Baddenoff possible claim against ABC . (Suppose that amount involved is material to ABC.)

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M918848

Have any Question? 


Related Questions in Accounting Basics

Question 1you own an automobile parts company and have been

Question #1 You own an automobile parts company and have been approached by a leading car manufacturer to supply parts to the company. How would you determine that the car manufacturer has a good record of servicing sale ...

Task - task covers study schedule weeks 5-12 inclusiveq21-

Task - Task covers study schedule weeks 5-12 inclusive. Q2.1- Naming cells in spreadsheets Critically evaluate a YouTube video on naming cells in spreadsheets. What are the advantages of naming cells in formulas Paste an ...

Colt football co had a player contract with watts that is

Colt Football Co. had a player contract with Watts that is recorded in its books at $5,600,000 on July 1, 2014. Day Football Co. had a player contract with Kurtz that is recorded in its books at $7,000,000 on July 1, 201 ...

Part a1000 word short essay about the nature of impairment

Part A: 1000 word short essay about the nature of "Impairment loss" and required disclosures including referencing.

1 proceeds from an issue of debt securities having stock

1) Proceeds from an issue of debt securities having stock warrants should NOT be allocated between debt and equity features when A. the allocation would result in a discount on the debt security B. the warrants issued wi ...

Provide a short conclusion on the calculations of variances

Provide a short conclusion on the calculations of variances in a cash budget.

Practice questionsdescribe the main disadvantages of using

Practice questions: Describe the main disadvantages of using money as a unit of measurement to record business transactions.

Case study - the complete accounting cyclerequirement 1

CASE STUDY - THE COMPLETE ACCOUNTING CYCLE REQUIREMENT 1: During its first month of operation, the View Corporation, a construction company which specializes in home remodeling, completed the following transactions: 1-Ja ...

Analyzing capital expendituresassume that you have received

Analyzing Capital Expenditures Assume that you have received a capital expenditure request for $52,000 for plant equipment and that you are required to do a justification analysis using capital budgeting techniques. The ...

Assignment 1 -scf-indirect method and net cash flow from

Assignment 1 - (SCF-Indirect Method, and Net Cash Flow from Operating Activities, Direct Method) Comparative balance sheet accounts of Marcus Inc. are presented below. MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate