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A lawsuit has been filed against XYZ Company. As year-end, the company's attorney believes that there is an 85% likelihood that the company will be

A lawsuit has been filed against XYZ Company. As year-end, the company's attorney believes that there is an 85% likelihood that the company will be found liable. The attorney believes that the estimated range of the liability is between $50,000 and $150,000 and that all amounts within the range are equally likely. In addition, the company has announced a restructuring plan prior to year-end that has created a valid expectation on the part of the employees to be terminated with an estimated liability of $500,000. As of year-end, there is currently no legal obligation to make any payments to the terminated employees. Lastly, the Company issued stock options with a fair value of $200,000 on January 1st with a 2 year vesting schedule.

  1. What would be the amount, if any, that XYZ would record on the balance sheet related to the lawsuit under IFRS and US GAAP?
  2. What would be the amount, if any, that XYZ would record on the balance sheet related to the restructuring under IFRS and US GAAP?

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