Don knew this was a good opportunity for him to speak. Im glad you mentioned the court case, Ms. Carlton. I need some information about that so I know how to report it in the financial statements. Jack Brown, BICs in-house legal counsel, responded, The court case in which BIC is currently involved alleges that some of our figure-enhancement products cause adverse health effects. Its not clear how this matter will play out if it gets down to a final judgment. We do have a chance of successfully defending the case, but if you want my honest opinion, theres a fairly big risk that we may lose, we need to explore the option of settling out-of-court because Im certain we can settle for about $200,000. If the case goes to trial and we lose, it could cost us about $450,000. Carlton interrupted, Jack, are you telling us that you havent done your homework? Theres got to be a way out of this without having to sacrifice our profits and it seems to me that you need to work harder at finding it. I think its safe to say, Don, that Jack will be able to find a strategy he can use to beat this lawsuit without it costing us anything. Jack nodded approvingly.

. Define the term loss contingency" and then describe the criteria recommended in accounting standards that are to be used to determine how loss contingencies should be reported. Provide appropriate citations for the standards that you reference. Accounting standards further indicate that when no amount within a range of probable losses is indicated as a better estimate than any other, the minimum amount in the range should be accrued. Disclosure of any exposure to loss in excess of the amount accrued would be made by way of a note to the financial statements. In BIC's case, what is the applicable range of losses to the lawsuit