Response to Client Request II Essay Example | Topics and Well Written Essays - 500 words

Response to Client Request II - Essay Example If the estimated loss is actually composed of a range of amounts, and no amount is a better estimate within this range, the requirement is to accrue the lowest amount and disclose the difference between the highest amount in the range and the amount accrued as this will inform the financial statement reader that more losses may be paid in the future (ASC 450 – 20 – 55 – 18 and ASC 450 – 20 – 55 – 36). Regarding the mortgage of the company, any disclosure or adjustment in the balances will depend upon the results of the company’s negotiation with its mortgage lender. Any gain or loss resulting from the negotiation needs to be recognized in the current period in accordance with ASC 60 – 35. If the company files for a Chapter 11 or if the mortgage is rewritten, rewriting or writing off of the mortgage will still depend on the outcome of such negotiations. As to the intangible asset, namely the patent, if the loss contingency becomes probable, the company will need to record an impairment for the patent, such impairment will be charged to the company’s current income as loss (ASC 350 – 30 – 35 – 11). On the other hand, the hedge (assuming that it does meet the requirements for it to be designated as a hedge under ASC 815 – 20), the net gain related to the patent, which was originally recognized under accumulated other comprehensive income, shall be reclassified and recognized as part of the company’s earnings under ASC 815 – 30 – 35 - 43. Financial Accounting Standards Board. ASC 450 – 20: Loss Contingencies. Retrieved from: http://asc.fasb.org/section&trid=2127173%26analyticsAssetName=subtopic_page_subsection%26nav_type=subtopic_page#topic-450-20-25-subsect-01-108346. Financial Accounting Standards Board. ASC 350 – 30: General Intangibles Other than Goodwill. Retrieved from: http://asc.fasb.org/subtopic&trid=2144471&nav_type=left_