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Question 3 (8 marks) Part A (4 Marks) ABC Inc. is being sued by a...

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Question 3 (8 marks) Part A (4 Marks) ABC Inc. is being sued by a client for an alleged breach of contract. The company's lawyers are uncertain as to what the outcome of the case will be. The client is suing ABC for $500,000 plus damages. Should ABC record a liability on its books due to the impending litigation? Briefly explain why or why not? Part B (4 Marks) For the following two objectives, explain briefly what each means in terms of financial reporting. Include in your response how the objective would impact the recording of revenues and expenses and what would be important to a user (either internal or external) of financial statements: 1) Income Tax Deferral 2) Stewardship

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