Polska Corporation journal entry

Polska Corporation, in" rel="nofollow">in preparation of its December 31, 2017, fin" rel="nofollow">inancial statements, is attemptin" rel="nofollow">ing to determin" rel="nofollow">ine the proper accountin" rel="nofollow">ing treatment for each of the followin" rel="nofollow">ing situations. 1.As a result of unin" rel="nofollow">insured accidents durin" rel="nofollow">ing the year, personal in" rel="nofollow">injury suits for $350,000 and $60,000 have been filed again" rel="nofollow">inst the company. It is the judgment of Polska's legal counsel that an unfavorable outcome is unlikely in" rel="nofollow">in the $60,000 case but that an unfavorable verdict approximatin" rel="nofollow">ing $250,000 will probably result in" rel="nofollow">in the $350,000 case. 2.Polska owns a subsidiary in" rel="nofollow">in a foreign country that has a book value of $5,725,000 and an estimated fair value of $9,500,000. The foreign government has communicated to Polska its in" rel="nofollow">intention to expropriate the assets and busin" rel="nofollow">iness of all foreign in" rel="nofollow">investors. On the basis of settlements other firms have received from this same country, Polska expects to receive 40% of the fair value of its properties as fin" rel="nofollow">inal settlement. 3.Polska's chemical product division consistin" rel="nofollow">ing of five plants is unin" rel="nofollow">insurable because of the special risk of in" rel="nofollow">injury to employees and losses due to fire and explosion. The year 2017 is considered one of the safest (luckiest) in" rel="nofollow">in the division's history because no loss due to in" rel="nofollow">injury or casualty was suffered. Havin" rel="nofollow">ing suffered an average of three casualties a year durin" rel="nofollow">ing the rest of the past decade (rangin" rel="nofollow">ing from $60,000 to $700,000), management is certain" rel="nofollow">in that next year the company will probably not be so fortunate.(a)Prepare the journal entries that should be recorded as of December 31, 2017, to recognize each of the situations above. (b)Indicate what should be reported relative to each situation in" rel="nofollow">in the fin" rel="nofollow">inancial statements and accompanyin" rel="nofollow">ing notes. Explain" rel="nofollow">in why.