Iniciar sesOn February 15, 2022, CHAS received notice that a client may sue the ☆company for $10 million. The lawsuit is based on an accident thecustomer had at the CHAS store on December 23, 2021.The claim has not been filed by the client. However, CHASunderstands that the client is likely to sue, and the firm's legal counselunderstands that the client is also likely to win the case. However, theamount estimated by the advisers is between $3.5 million and $6million.CHAS closes its books on December 31 of each year. The 2018 10kreport and annual report were released on March 25, 2019. Howshould CHAS record this event?to.As a loss in the 2021 Statement of Income and Expenses for $3.5million.b.As a loss in the 2022 Statement of Income and Expenses for $3.5million.С.As a loss in the Statement of Income and Expenses for 2021 for $6million because it is the most conservative.d.As a note to the 2018 financial statements with no effect on theacBook Air to.As a loss in the 2021 Statement of Income and Expenses for $3.5million.b.As a loss in the 2022 Statement of Income and Expenses for $3.5million.C.As a loss in the Statement of Income and Expenses for 2021 for $6million because it is the most conservative.d.As a note to the 2018 financial statements with no effect on thefinancial statements because the lawsuit has not yet been filed.MacBook AirDIIDDF7F8F9F10F11F1*8.%3D

A contingent liability seems to be a possible responsibility that might or might not materialize…

Answered: On February 15, 2022, CHAS received…

On February 15, 2022, CHAS received notice that a client may sue company for $10 million. The lawsuit is based on an accident the customer had at the CHAS store on December 23, 2021.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 13MCQ

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