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. During 2018, a former employee of Staple Company filed a lawsuit alleging age discrimination and...

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Accounting

. During 2018, a former employee of Staple Company filed alawsuit alleging age discrimination and asking for damages of$500,000. At December 31, 2018,Staple's legal counsel indicatedthat the likelihood of losing the lawsuit was possible but notprobable and a good estimate for any potential loss isapproximately $250,000 based on previous experience with similarcases. How should this suit be handled on the 2018 financialstatements?

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As per the GAAP the accounting treatment of a contingent loss depends upon the category of contingent loss Contingent loss can be classified as Probable Loss A probable loss refers to a situation in which the future event that will result    See Answer
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. During 2018, a former employee of Staple Company filed alawsuit alleging age discrimination and asking for damages of$500,000. At December 31, 2018,Staple's legal counsel indicatedthat the likelihood of losing the lawsuit was possible but notprobable and a good estimate for any potential loss isapproximately $250,000 based on previous experience with similarcases. How should this suit be handled on the 2018 financialstatements?

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