A lawsuit has been filed against North Shore Company. As year-end, the company’s attorney believes that there is an 60% likelihood that the company will be found liable. The attorney believes that the estimated range of the liability is between $150,000 and $300,000 and that all amounts within the range are equally likely. Unrelated to this lawsuit, the company has settled an insurance claim before year-end in the amount of $72000. The company will receive the money subsequent to year-end. What would be the amount, if any, that North Shore would record on the balance sheet related to the lawsuit under IFRS and US GAAP? What amount, if any, would North Shore record related to the insurance settlement under IFRS and US GAAP?
A lawsuit has been filed against North Shore Company. As year-end, the company’s attorney believes that there is an 60% likelihood that the company will be found liable. The attorney believes that the estimated range of the liability is between $150,000 and $300,000 and that all amounts within the range are equally likely. Unrelated to this lawsuit, the company has settled an insurance claim before year-end in the amount of $72000. The company will receive the money subsequent to year-end. What would be the amount, if any, that North Shore would record on the balance sheet related to the lawsuit under IFRS and US GAAP? What amount, if any, would North Shore record related to the insurance settlement under IFRS and US GAAP?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 11RE: After years of experience, Dilcort Company reasonably estimated that a loss from a pending lawsuit...
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A lawsuit has been filed against North Shore Company. As year-end, the company’s attorney believes that there is an 60% likelihood that the company will be found liable. The attorney believes that the estimated range of the liability is between $150,000 and $300,000 and that all amounts within the range are equally likely.
Unrelated to this lawsuit, the company has settled an insurance claim before year-end in the amount of $72000. The company will receive the money subsequent to year-end.
- What would be the amount, if any, that North Shore would record on the balance sheet related to the lawsuit under IFRS and US GAAP?
- What amount, if any, would North Shore record related to the insurance settlement under IFRS and US GAAP?
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