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Buchanan Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Buchanan will lose the case and
Buchanan Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Buchanan will lose the case and that a reasonable estimate of damages to be paid by Buchanan is $307,760. In light of this case, Buchanan is considering establishing a $112,660self-insurance allowance.
What entry, if any, should Buchanan record to recognize this loss contingency?
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