Answer the following questions:
In preparing your answers for questions 1 to 4, you will need to
refer to OI’s amended 10-K for 2015, which can be found by clicking here (Links to an external site.).What journal entry would OI have made to record the additional $295 million of asbestos liability?
Briefly summarize the effect of the restatement on the following financial statements.
The income statement.
The balance sheet.
The statement of cash flows.
The statement of share owners’ equity.
What accounts were affected? By how much?
What other disclosures were
impacted? Note 1 in the restated 2015 10-K describes the changes.
Explain why OI’s treatment resulted in an increase to the earnings for 2015, 2014, and 2013.
Based on OI’s disclosures in the 10-K prior to restatement, was it
clear that the firm was using a three-year period to estimate asbestos
litigation?
Be sure to explain your response.
The discussion between the SEC and OI was extensive and interesting.
Appendix A shows all of the correspondence between the two and includes
web links to the letters. The following questions are based on those
letters and the information in the case.
Briefly summarize OI’s justification of its treatment of the
unasserted asbestos liability. What are the pros and cons of OI’s
original treatment of the asbestos liability?
Briefly summarize the SEC’s position regarding the treatment of the
unasserted asbestos liability. What are the pros and cons of the SEC’s
approach?
Which approach do you find preferable and why? You can choose either
OI or the SEC, but your analysis needs to be based on something other
than the fact that the SEC prevailed or OI did not.
How is OI’s experience with asbestos litigation similar to Garlock’s? How is it different?
Approaching this issue as a member of OI’s executive management
group, describe how your approach to asbestos litigation would be
similar to or different from OI’s.
Submission Requirements:
Your Word document should be 8–10 pages in length (not including the
required cover and references pages). Submissions in excess of 10 pages
are permitted. It is highly recommended that you include in bold type
the questions you are required to answer, with the answers directly
underneath each question.
You must submit an Excel file as a separate file supporting your submission.
Be sure to discuss and reference concepts taken from the required
and recommended readings throughout the course and also from your own
relevant research.
You must include a minimum of six credible academic, or professional
references beyond the course text, required and recommended readings,
or other course materials.
Requirements: 8-10 pages plus an excel document to support the data
