The following are two independent situations. The underlined entity is the reporting entity. (Click the icon to view the situations.) Required a (i) Assuming that the reporting company prepares its financial statements in accordance with IFRS, indicate whether the appropriate accounting treatment is to (A) recognize a liability or (B) disclose the details of the contingency in the notes to the financial statements. Describe how the event should be dealt with in the financial statements and explain why to be provided for. The The loss is obligation Require probable and has remote and does not need a. Assu dres its financial statements in accordance i. For each of the two situations described above, indicate whether the appropriate accounting treatment is to: A. recognize a liability. B. disclose the details of the contingency in the notes to the financial statements. il. For each situation that requires the recognition of a liability, record the joumal entry. most likely outcome minimum in the range method with IFRS: b. Assuming that the reporting company prepares its financial statements in accordance with ASPE: i. For each of the two situations described above, indicate whether the appropriate accounting treatment is to: A. recognize a liability. B. disclose the details of the contingency in the notes to the financial statements. ii. For each situation that requires the recognition of a liability, record the journal entry. is used to determine the amount of the obligation based on legal counsel's best estimate of the amount required to settle the Situations 1. Broken Horse Stables Inc. sued Topnotch Equestrian Inc. for $1.5 million alleging breach of contract. Topnotch's legal counsel estimates that Broken Horse's likelihood of success is about 62%. Based on its experience with cases of this nature, the law firm suggests that if the litigant is successful, then it will be awarded from $450,000 to $900,000, with all payouts in this range being equally likely 2. Meagan Morton broke her arm when she slipped on the ice in front of the office of Boondoggle Inc. On the advice of legal counsel, Boondoggle has offered Morton $350,000 to settle her $550,000 lawsuit. It is unknown whether Morton will accept the settlement offer. Boondoggle's legal counsel estimates that Morton has a 85% probability of success, and that if successful, she will be awarded $100,000 to $400,000, with all payouts in this range being equally likely. Print Done X