. A government hospital determines that the death of a patient was the result of negligence on...
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Question:
. A government hospital determines that the death of a patient was the result of negligence on the part of its medical staff. As of the date its nancial statements are to be released, no claims have been asserted against the hospital. Nevertheless, based on past experience, the hospital is reasonably certain that a lawsuit will be forthcoming and estimates it will likely result in a required cash payment of between $3 and $5 million after accounting for insurance recoveries. In its nancial statements the hospital should
a. Make no mention of the potential litigation and possible settlement
b. Record an expense of $4 million
c. Record an expense of $5 million
d. Disclose the nature of the incident and indicate the likely range of the loss
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