Question
At December 31, 1999 ABC Company has the following three separate lawsuits pending against it: Suit A-Plaintiffs seek damages of $40,000; Suit B-Plaintiff seeks damages
At December 31, 1999 ABC Company has the following three separate lawsuits pending against it:
Suit A-Plaintiffs seek damages of $40,000; Suit B-Plaintiff seeks damages of $200,000; and Suit C-Plaintiff seeks damages of $20,000.
ABC management and legal counsel have made the assessments indicated below. For each suit, taking into account the assessment, you are to (a) give the accrual entry if it is required (if not, state why) and (b) indicate whether a disclosure note is required and explain the reason.
CASE A-Remote that ABC will lose the suit.
CASE B-Reasonably possible that ABC will lose; reasonable estimate of damages $4,000.
CASE C-Probable that ABC will lose; reasonable estimate of damages $10,000.
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