Question
A customer has sued Smith & Sons for an injury sustained while shopping at a company outlet. The companys management determined that it is possible
A customer has sued Smith & Sons for an injury sustained while shopping at a
company outlet. The companys management determined that it is possible that
the customer will win the lawsuit and estimated that the possible lawsuit award
might be as high as $1,000,000. Smith & Sons should:
Select one:
Record a liability in the companys financial statements.
Record a liability and a loss in the companys financial statements.
Do not record a liability in the financial statements but disclose the information in a note to the companys financial statements.
Neither record a liability in the companys financial statements nor disclose the information in a note to its financial statements.
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