On December 4, 2013, Dan Johnson, delivery truck driver for Farmers Products Inc., ran a stop sign and collided with another vehicle. On January 8, 2014, the driver of the other vehicle filed suit against Farmers Products for damages to the vehicle. Estimated damages to this vehicle were between $6,000 and $10,000. Farmers Products issued its 2013 financial statements on March 3, 2014.
Required:
1. Prepare the disclosures and/or journal entries Farmers Products should make in preparing its December 31, 2013, financial statements.
2. If Farmers Products used IFRS, how would the disclosures and/or journal entries differ from those under U.S. GAAP?