PROVISION LIABILITY

ABC Co. presents the following information for 2020: A new product liability lawsuit was files related to the drug of the Pharmacy, the attorneys asses the likelihood (55%) and allows the company to record a loss under IFRS. If the range of estimates is between $100,000 and $200,000.

a. Determine the amount of Loss (if any) that ABC will accrue for 2020 using IFRS. $100,000.

b. If ABC Co. uses US GAAP, what is the effect of this transaction on Net Income in 2020?

Increase _______, Decrease ________, It remains the same ________ (select only one)

Explain.