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

Intermediate management accounting1carpe diem co reported

Intermediate Management Accounting 1. Carpe Diem Co. reported the following variances for the period: Direct materials price variance $1,700 U Direct labour efficiency variance 23,600 U Fixed overhead volume variance 10, ...

Problemin an annual audit on december 31 2016 novelty

Problem In an annual audit on December 31, 2016, Novelty company provided the following transactions: 1. Merchandise was received on January 8, 2017, and related purchase invoice recorded on January 5, 2017. The invoice ...

Culturally diverse individuals are effective workerssuppose

Culturally Diverse Individuals Are Effective Workers Suppose you work as a human resource (HR) executive at Total Solutions, Inc., a culturally and geographically diverse organization. A recent government study on human ...

Individual research papercompany case study assignmentthis

Individual Research Paper Company Case Study Assignment This assignment has a number of learning objectives, sources, and opportunities: 1. You will explore financial performance and investor information available fromva ...

1 what does it mean to create a culture of honesty openness

1. What does it mean to create a "Culture of Honesty, Openness, and Assistance?" Give some examples from an organization with which you have been affiliated. (250 words) 2. Review the section Preventing Fraud-A Sumary an ...

Managerial accounting and financial accountingcompare and

Managerial Accounting and Financial Accounting Compare and Contrast Managerial Accounting and Financial Accounting. Be sure to discuss how managerial accounting is useful for providing information for at least one of the ...

Problem -using the following proforma information regarding

Problem - Using the following proforma information regarding GE, Inc. based on analysts' forecast in early 2016:   2016E 2017E Next 3 years EPS 1.29 1.56 Growth at 7.59% DPS 0.92 1.11 Growth at 10% The book value of GE's ...

Auditing and professional practice assignmentcase study 1

Auditing and Professional Practice Assignment Case Study 1: Consider each of the following independent situations: (a) City Ltd, a property developer, has several major projects in progress in Brisbane's central business ...

Assignmentpart iexplain what you learn about the

Assignment PART I Explain what you learn about the disclosures of your SEC 10-K company relating to Income Taxes. Your comments should relate to net income or loss as well as to the balance sheet treatment and disclosure ...

Waupaca company establishes a 480 petty cash fund on

Waupaca Company establishes a $480 petty cash fund on September 9. On September 30, the fund shows $211 in cash along with receipts for the following expenditures: transportation-in, $51; postage expenses, $65; and misce ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro