Bench Co. is a medium sized publicly listed company. Recently, the company has a few lawsuits outstanding. It will take several years for the lawsuits to be settled. The company has consulted its lawyers for their best estimates. The lawyers suggest that a stream of cash flows related to the lawsuits will be paid out by the company in the future. These lawsuits must be recorded on the company’s financial statements this year. Suppose that you have been newly hired as an accountant in the company. Your supervisor asks you to determine the amount to be recorded for the lawsuits.

 Required: Explain the cash flow approach you would use to determine the amount.