1. Merlough Pharmaceuticals, Inc. is involved in various lawsuits regarding product liability, commercial liability, and other matters that arise from time to time in the ordinary course of business. The lawsuits pending at the beginning of the year and those filed in the current years are detailed below.

Pending Lawsuit at the Beginning of the Year

Product liability lawsuit related to Tomak, a pharmaceutical drug, in which claimants seek substantial damages. Bordoghs attorneys

assess the likelihood of losing the lawsuit as reasonably possible at 60%. At the beginning of the year, the estimated loss

ranged from $480,000 to $1,490,000. At the end of the year, the attorney's assessment of the loss increased to a

range between $730,000 and $1,990,000

A. Explain the accounting for the first lawsuit by answering the questions in the table below. how each of the lawsuits is accounted for under U.S. GAAP

Does a Type of Likelihood Record Footnote disclosure

Contingency exist? Contingency of occurrence (accrue)? Required?

________ ________ _________ ________ ___________

B. Prepare any journal entries required at the end of the year

2 personal injury lawsuit in which a claimant seeks substantial damages. Bordoghs attorneys assess the likelihood of losing the lawsuit as probable at 97% at the beginning of the year, Bordogh reported a contingency liability of $790,00 for the lawsuit. At the end of the year, the attorneys assessment of the loss increased to a range between $870,000 and $2600,000.

A. Explain the accounting for the first lawsuit by answering the questions in the table below. how each of the lawsuits is accounted for under U.S. GAAP

Does a Type of Likelihood Record Footnote disclosure

Contingency exist? Contingency of occurrence (accrue)? Required?

________ ________ _________ ________ ___________

B. Prepare any journal entries required at the end of the year

3. A new product liability lawsuit was filed related to the drug Romak. Merlough 's attorneys assess the likelihood of losing the lawsuit as remote at 5 %. The attorney's assessment of the loss ranges between $870000,000 and $2,600,000.

a. Explain the accounting for the first lawsuit by answering the questions in the table below. how each of the lawsuits is accounted for under U.S. GAAP

Does a Type of Likelihood Record Footnote disclosure

Contingency exist? Contingency of occurrence (accrue)? Required?

________ ________ _________ ________ ___________

B. Prepare any journal entries required at the end of the year

4. A new product liability lawsuit was filed related to the drug Havetowait. Merlough 's attorneys assess the likelihood of losing the lawsuit as probable. The attorney's assessment of the loss ranges between $1,500,000 and $3,900,000. Explain the accounting for the fourth lawsuit by answering the questions in the table below.

A. Explain the accounting for the first lawsuit by answering the questions in the table below. how each of the lawsuits is accounted for under U.S. GAAP

Does a Type of Likelihood Record Footnote disclosure

Contingency exist? Contingency of occurrence (accrue)? Required?

________ ________ _________ ________ ___________

B. Prepare any journal entries required at the end of the year

5. A personal injury lawsuit in which a claimant seeks substantial damages. Merlough attorneys assess the likelihood of losing the lawsuit as probable at 98 %. At the beginning of the year, Merlough reported a contingent liability of $780,000

for the lawsuit. At the end of the year, the attorney's assessment of the loss increased to a range between $950,000

and $2,700,000.

A. Explain the accounting for the first lawsuit by answering the questions in the table below. how each of the lawsuits is accounted for under U.S. GAAP

Does a Type of Likelihood Record Footnote disclosure

Contingency exist? Contingency of occurrence (accrue)? Required?

________ ________ _________ ________ ___________

B. Prepare any journal entries required at the end of the year