Top Sound International designs and sells high-end stereo equipment for auto and
ID: 2504903 • Letter: T
Question
Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2012 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $6.5 million. The fiscal year ends on December 31.
What loss, if any, should Top Sound report in its 2012 income statement?
Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2012 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $6.5 million. The fiscal year ends on December 31.
.What loss, if any, should Top Sound report in its 2012 income statement?
Explanation / Answer
6500000
contingent liability