= Homework: Week Four Question 9, E13-8 (book/. Part 1 of 2 HW Score: 47.78%, 5.26 of 11 points Score: 0 of 1 Save In January 2015, a customer filed a lawsuit against Fireen's Boutique. The customer fell on an icy patch in the store's parking lot and broke an ankle in December. Fireen's fiscal year-end is January 31. The company's attorneys believe that it is reasonably possible that Fireen's will lose this case, with a 60% probability. The attorneys estimate that the loss will range between $400,000 and $500,000, which is material to Fireen's. Requirements a. Explain how the lawsuit should be reported. b. Prepare any journal entries required. CHE Requirement a. Explain how the lawsuit should be reported. O A. After we determine that a contingency exists, we assess the likelihood incurring a loss. Because the loss is reasonably possible, Fireen does not record a loss nor report a liability. Because a loss is reasonably possible and the amount can be reasonably estimated, Fireen discloses the contingency. OB. The lawsuit is not a contingency, therefore, Fireen will not accrue or disclose a loss. O C. The pending lawsuit represents a gain contingency. Because the gain is likely to occur and the amount can be reasonably estimated, Fireen records a gain and increases an asset account. OD. The pending lawsuit represents a loss contingency. Because the loss is likely to occur and the amount can be reasonably estimated, Fireen records a loss and accrues a liability Click to select your answer and then click Check Answer. e Text Pages Calculator Get More Help Clear All Check Answer Type here to search O a 79F Cloudy ra 5:50 PM 8/29/2021