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Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2 0 2 4 of a circuit flaw in an amplifier
Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $ million. The fiscal year ends on December Required: Should this loss contingency be accrued, only disclosed, or neither? What loss, if any, should Sound Audio report in its income statement? What liability, if any, should Sound Audio report in its balance sheet? Prepare any journal entry needed.
Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $ million. The fiscal year ends on December
Required:
Should this loss contingency be accrued, only disclosed, or neither?
What loss, if any, should Sound Audio report in its income statement?
What liability, if any, should Sound Audio report in its balance sheet?
Prepare any journal entry needed.
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