1. ABC Co. is being sued for $1,000,000 by a former customer. At 12/31/2010 ABCs lawyer feels that it if ABC is found to be negligent and required to pay damages, that the amount will be $800,000. The legal proceedings regarding the lawsuit will not be completed until October of 2011. Assume that in October 2011, the legal case is decided and ABC is forced to pay $900,000. What amount of gain or loss related to this case would ABC record in each year?

20102011

1. Assume that at 12/31/2010

The lawyers judgment is that it is reasonably possible that ABC will be required to pay damages.

Box A

Box B2. Assume that at 12/31/2010 the lawyers judgment is that it is probable that ABC will be required to pay damages.Box CBox D