Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. A company is sued for an injury allegedly provoked by a faulty product and 1,5 mil. EUR are requested by the affected customer. In

2. A company is sued for an injury allegedly provoked by a faulty product and 1,5 mil. EUR are requested by the affected customer. In year N when the lawsuit started the lawyers estimate that the company will not be found guilty. In year N+1 new evidence is used and the lawyer believe now that the company will have to pay for the damage an estimated amount of 1 mil. of the required amount. In N+2 the lawsuit is finalized and the amount paid is 1.2 mil. EUR. a) Discuss when and why a provision is recognized b) Discuss the implications on the financial statements.
image text in transcribed
2. A company is sued for an injury allegedly provoked by a faulty product and 1,5 mil. EUR are requested by the affected customer. In year N when the lawsuit started the lawyers estimate that the company will not be found guilty. In year N+1 new evidence is used and the lawyer believe now that the company will have to pay for the damage an estimated amount of 1 mil. of the required amount. In N+2 the lawsuit is finalized and the amount paid is 1.2 mil. EUR. a) Discuss when and why a provision is recognized b) Discuss the implications on the financial statements

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Guidelines For Auditing Process Safety Management Systems

Authors: CCPS (Center For Chemical Process Safety)

2nd Edition

0470282355, 978-0470282359

More Books

Students also viewed these Accounting questions

Question

Analyse the various techniques of training and learning.

Answered: 1 week ago