Below are three independent situations (under GAAP)

1. Kowalski is involved in a pending court case. Kowalskis lawyers believe it is probable that Kowalski will be awarded damages of $14,000,000.

2. In February, 2020 a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued Marsili Co. for $1,100,000. Counsel believes it is reasonably possible that the outcome of the suit will be unfavorable and that the settlement would cost the company from $350,000 to $700,000.

3. A suit for breach of contract seeking damages of $2,400,000 was filed by ORourke against Samrin Co. on January 4, 2020. O'Rourke legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the award to the plaintiff is between $900,000 and $1,300,000. No amount within this range is a better estimate of potential damages than any other amount.

Instructions

In paragraph form, discuss the accounting treatment for the above situations. Also, if a journal entry is necessary, please show the proper entry, as well.