Ponding Lawsuit at the Boginning of the Year 2. A personal injury a suit in whic
ID: 2403237 • Letter: P
Question
Ponding Lawsuit at the Boginning of the Year 2. A personal injury a suit in which a clamant seeks substantial damages. Merlough's atto e s assess the elihood of sing the lawsuit as probable at 6%. A the beginning o tevea Merloughreported a or the lawsuit. At the end of the year, the attorney's assessment of the loss increased to a range between $880,000 and $2,700,000. gent a tyo 800 for Explain the accounting for the second lawsuit by answering the questions in the table below. (Complete all answer boxes.) Does a Type of Likelihood Record Footnote disclosure of occurance (accrue)? required? Prepare the journal entry below if required at the end of the year for the second pending lawsuit (Record debits first, then credits. Exclude explanations from any joumal entries. If no entry is required select "No Entry Required" on the first line of the jounal entry table and leave all remaining cells in the table blank.) Account December 31, Current YearExplanation / Answer
Yes contingency adjust Tyes of contingency It is a probable liability Liklihood of occurnece Probable Record (accure) Accure Footnote disclosure required No Accounts title Dr Cr Lawsuit expenses $80,000 Estimated Lawsuit liability $80,000 (as per US GAAP) IFRS Lawsuit expenses 990000 Estimated Lawsuit liability $990,000 (880000+2700000)/2-800000