Do you consider litigation risk when deciding whether to invest in VW bonds? How much of a premium do you think you would need to entice you to invest? How would you measure the premium?
If you were the CEO or CFO of KHC, what disclosures would have allegedly been required of you with respect to the items alleged in the law suit? Under what circumstances would you be required to record a contingency?
Sherwin Williams is in litigation regarding lead paint. The case cites ads the firm ran in the early 1900s. If you were the firm’s CFO, what would you do with respect to disclosure requirements? Would you need to book a contingency? If you were the firm’s corporate counsel, what would you tell the CFO with respect to formally recognizing the contingency?
GE is planning to record a $6.2 billion charge for underestimating a liability for longterm care insurance policies sold years ago. How do you think this amount was estimated? What does the charge signify in terms of earnings, cash flows, the value of GE stock?
So Yahoo is being investigated for the delay in disclosure re: the cybersecurity breach. If you were CEO, how would you determine, not only if you must disclose, but also by when?
So the SEC fined GM $1,000,000 for failing to disclose the ignition switch problem internally to its accountants so they could assess whether a loss contingency should have been booked. What is the purpose of this fine? Who will pay it? How do you think it was determined?
So VW may accrue another billion as a contingent liability. What is the threshold for balance sheet recognition of contingencies under US GAAP? Under IFRS? Do you believe these future costs have already been reflected into the firm’s stock price? How could you determine if they have?
What do you think were all the factors that Walmart considered in its decision to settle the lawsuit? How (and where . . . i.e., which part of the 10-K) would you check to see if Walmart had a accrued a liability for this?
BP will accrue a charge in the current quarter of several billion for the 2010 Gulf of Mexico oil spill. Why do you think it has taken so long for BP to be able to estimate the damage and accrue such a charge? What is the threshold for accruing such charges under U.S. GAAP? Under IFRS?
Under what circumstances would VW accrue a liability for the emissions issue? How would the firm measure the amount of the contingent liability, if it were to accrue one?
Fiat Chrysler was fined around $100 million. How would you determine if the firm accrued the penalty? By looking at the note pertaining to income taxes, how would you determine if any of the amount is tax deductible?
Apparently a large portion of BP’s settlement for the Gulf Oil spill is tax deductible. In your opinion, should it be tax deductible? Why or why not? Assuming the deduction will be taken in the future, what is the entry to recognize tax expense and the deferred tax asset? What is the effect on the effective tax rate on the nondeductible portion?
What do you think are the implications of the NLRB ruling about joint employer relationships for McDonald’s and it franchisees? Would this ruling possibly affect recognition of contingent liabilities? If so, how?
J&J settled with the Dept. of Justice over allegations of marketing drugs for unapproved uses. J&J had accrued a reserve in advance. Does the settlement suggest they need to reserve more? How would you decide if so, and how much more? Does the settlement affect your view of J&J? How?
Do you think that Hyundai will accrue a contingent liability for the false mileage claim? Why or why not? Assuming they do, what would the “journal entry” be? How do you think investors will react to the false claim?
So, Apple “won” a billion dollar damage award against Samsung. Should Apple accrue this “receivable”? Should Samsung accrue the payable (contingency)? Why or why not?
The EU is aggressively pursuing Google as a monopolist. At what point would Google supposedly book a contingent liability? Will the markets react at that point, or will they have already reacted?
