Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. reporting a legal contingency on november 5, shipp

Reporting a Legal Contingency On November 5, Shipper Inc.'s vehicle was in an accident with...

60.1K

Verified Solution

Question

Accounting

image

Reporting a Legal Contingency On November 5, Shipper Inc.'s vehicle was in an accident with another vehicle driven by R. Bell. Shipper received notice on January 12 of the following year of a lawsuit for $350,000 in damages for personal injuries suffered by Bell. The company's legal counsel believes it is probable that Bell will be awarded an estimated amount in the range between $100,000 and $225,000, and that $150,000 is a better estimate of potential liability than any other amount. The company's accounting year ends on December 31, and the current calendar year-end financial statements were issued on March 2 of the following year. a. What liability should the company accrue on December 31? b. How would your answer to (a) change if the company's legal counsel believes it is reasonably possible that Bell will be awarded a settlement? c. How would your answer to (a) change if the company's legal counsel believes there is only a remote possibility that Bell will be awarded a settlement

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students