Question Help 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 b. Prepare any jou 0 Instructor Tip X Requirement a. Ex "Reasonably possible with a 60% probability" does not mean "probable." It sounds like it should, but the specific word "probable" is important. Dss is ssible and the O A. After we det reasonably amount can OB. The pending reasonably O C. The lawsuit OD. The pending reasonably an be an be Requirement b. Po entries. If no entry it om journal blank.) Close Account Choose from any list or enter any number in the input fields and then continue to the next question. Question Help 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. Requirement a. Explain how the lawsuit should be reported O A. After we determine that a contingency exists, we assess the likelihood of 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. B. 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. OC. The lawsuit is not a contingency; therefore, Fireen will not accrue or disclose a loss, 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. Requirement b. Prepare any journal entries required. (Record debits first, then credits. Exclude explanations from journal entries. If no entry is required, select "No entry required" on the first account line and leave the remaining cells blank.) Account Current Year Choose from any list or enter any number in the input fields and then continue to the next question 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 attomeys 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. O A. After we determine that a contingency exists, we assess the likelihood of 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. B. 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. OC. The lawsuit is not a contingency; therefore, Fireen will not accrue or disclose a loss. 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 Requirement b. Prepare any journal entries required. (Record debits first, then credits. Exclude explanations from journal entries. If no entry is required, select "No entry required" on the first account line and leave the remaining cells blank.) Increa Account Current Year $ $ CA $ $ Choose from any list or enter any number in the input fields and then continue to the next question Review 1.772" 85% 21 Fxcel Proiect Assignment Not Support
