This is a two part Discussion. The discussions need only be 150 words plus. They do not need a title page or be in APA.
This is the first part:
Czeslaw Corporation’s research and development department has an idea for a project it believes will culminate in a new product that would be very profitable for the company. Because the project will be very expensive, the department requests approval from the company’s controller, Jeff Reid.
Reid recognizes that corporate profits have been down lately and is hesitant to approve a project that will incur significant expenses that cannot be capitalized due to the requirements of the authoritative literature. He knows that if they hire an outside firm that does the work and obtains a patent for the process, Czeslaw Corporation can purchase the patent from the outside firm and record the expenditure as an asset. Reid knows that the company’s own R&D department is first‐rate, and he is confident they can do the work well.
Answer the following questions.
This is the second part:
On February 1, 2013, one of the huge storage tanks of Viking Manufacturing Company exploded.
Windows in houses and other buildings within a one‐mile radius of the explosion were severely damaged, and a number of people were injured. As of February 15, 2013 (when the December 31, 2012, financial statements were completed and sent to the publisher for printing and public distribution), no suits had been filed or claims asserted against the company as a consequence of the explosion. The company fully anticipates that suits will be filed and claims asserted for injuries and damages. Because the casualty was uninsured and the company considered at fault, Viking Manufacturing will have to cover the damages from its own resources.
Discuss fully the accounting treatment and disclosures that should be accorded the casualty and related contingent losses in the financial statements dated December 31, 2012.