Question
How should Canada Dry account for the lawsuit filed against it because its ginger ale allegedly does not contain ginger root? A woman has filed
How should Canada Dry account for the lawsuit filed against it because its ginger ale allegedly does not contain ginger root?
A woman has filed a lawsuit against Canada Dry and its parent company Keurig Dr. Pepper[1] (NYSE: KDP (Links to an external site.)), claiming that its ginger ale does not contain enough ginger to be a healthier alternative to sodas. The plaintiff purchased Canada Dry ginger ale when her children were sick, because she thought it would soothe their stomachaches due to the ginger root in the ginger ale. The attorney for the woman stated that a laboratory analysis of the ingredients of the ginger ale indicated it contained carbonated water, high fructose corn syrup, citric acid, preservatives and natural flavors. The natural flavors were allegedly flavor extracts not from ginger and a miniscule amount of a ginger flavor extract.
The lawsuit contends that Canada Dry is misleading its customers.
Question:
In your opinion, how do you think Keurig Dr. Pepper/Canada Dry will treat this contingent liability from an accounting standpoint? Why do you think that? Support your answer!
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