The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31 . Financial statements are issued in March 2022. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $2,600,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $3,600,000 to $5,600,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $6,600,000, with a present value of $5,100,000. 4. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, the judgment will be $2,600,000. 5. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is virtually certain that the company eventually will prevail in court, and that if it prevails, the judgment will be $1,300,000. Carnes Electronics sells consumer electronics that carry a 90-day manufacturer's warranty. At the time of purchase, cu offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes rec for these extended warranties (approximately evenly throughout the year). Required: 1-a. Does this situation represent a loss contingency? 1.b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that shoul during the year. Complete this question by entering your answers in the tabs below. Does this situation represent a loss contingency? Carnes Electronics sells consumer electronics that carry a 90-day manufacturer's warranty. At the time of purchase, customers are offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes received $428,000 for these extended warranties (approximately evenly throughout the year). Required: 1-a. Does this situation represent a loss contingency? 1.b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that should be recorded during the year. Complete this question by entering your answers in the tabs below. How should it be accounted for? Journal entry worksheet Record the sale of extended warranty. Note: Enter debits before credits. Journal entry worksheet Record the revenue earned on extended warranty. Note: Enter debits before credits. The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31 . Financial statements are issued in March 2022. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $2,600,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $3,600,000 to $5,600,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $6,600,000, with a present value of $5,100,000. 4. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, the judgment will be $2,600,000. 5. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is virtually certain that the company eventually will prevail in court, and that if it prevails, the judgment will be $1,300,000. Carnes Electronics sells consumer electronics that carry a 90-day manufacturer's warranty. At the time of purchase, cu offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes rec for these extended warranties (approximately evenly throughout the year). Required: 1-a. Does this situation represent a loss contingency? 1.b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that shoul during the year. Complete this question by entering your answers in the tabs below. Does this situation represent a loss contingency? Carnes Electronics sells consumer electronics that carry a 90-day manufacturer's warranty. At the time of purchase, customers are offered the opportunity to also buy a two-year extended warranty for an additional charge. During the year, Carnes received $428,000 for these extended warranties (approximately evenly throughout the year). Required: 1-a. Does this situation represent a loss contingency? 1.b. How should it be accounted for? 2. Prepare journal entries that summarize sales of the extended warranties and any aspects of the warranty that should be recorded during the year. Complete this question by entering your answers in the tabs below. How should it be accounted for? Journal entry worksheet Record the sale of extended warranty. Note: Enter debits before credits. Journal entry worksheet Record the revenue earned on extended warranty. Note: Enter debits before credits