Pain medications have been in the news. The big drug company Merck had to withdraw its pain killer Vioxx from the market when it became known that the drug increased the risk of heart attacks. Other drugs are under scrutiny, like Celebrex from Pfizer. Do an Internet search on these terms and companies. Find out if any lawsuits have been initiated and how these companies are reacting. Access their annual reports and find out what they report under contingent liabilities in the notes to the financial statements and elsewhere. Have they set aside any reserves for liabilities? What are the criteria for recognizing potential liabilities in the accounting records?

Group Activity Case Nature and Recognition of an Estimated Liability