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It is year end 2021 and your company was notified that they are being fined $5,000,000 by the government. Your attorneys estimates it will cost
It is year end 2021 and your company was notified that they are being fined $5,000,000 by the government. Your attorneys estimates it will cost the company $1,000,000 in legal fees to defend against this charge, with a high probably that you will win and not have to pay the fine. In addition, in 2021, your company just won $1,000,000 on another lawsuit and will be paid in the following year. How should both these items be treated on the financials in 2021 and why? Please address each issue separately.
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