Vancouver Inc, a publicly traded company had the following two events happen in a short...
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Accounting
Vancouver Inc, a publicly traded company had the following two events happen in a short time around its fiscal year-end:
a) On Dec. 23, 2020, the company was served notice of a lawsuit filed by several customers as a result of perceived defective products claiming damages of $100,000. Vancouvers chief financial officer (CFO) talked to the companys legal team, which was of the opinion that the lawsuit had merit and determined that the company had the following probabilities of loss:
Probability Potential Loss
25% $10,000
50% 30,000
25% 50,000
b) On December 31, 2020, the company estimated that it owed $47,000 in income taxes. On January 15, as the financial statements were being prepared, the amount was calculated to be exactly $48,980.
Instructions: What should the company report on their December 31, 2020, Statement of Financial Position under liabilities as a result of these events?
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