18 Feb Goods Company is a major manufacturer of foodstuff
Goods Company is a major manufacturer of foodstuffs. The company’s products are sold in grocery and convenience stores throughout the United States. Goods’ name is well known and respected because its products have been marketed nationally for more than 50 years. In April 2014, Goods was forced to recall one of its major products. A total of thirty- five persons in Chicago were treated for severe intestinal pain, and eventually three people died from complications. All these people had consumed Goods’ product. Required: a. Goods Company plans to recognize the costs associated with the product tampering and recall as an extraordinary charge. i. Explain why Goods could classify this occurrence as an extraordinary charge. ii. Describe the placement and terminology used to present the extraordinary charge in the 2014 income statement. b. Refer to the fourteen cost items identified by the corporate accounting staff of Goods Company. i. Identify the cost items by number that should be included in the extraordinary charge for 2014. ii. For any item that is not included in the extraordinary charge, explain why it would not be included in the extraordinary charge.