Answer: answers below
Explanation:1.) No entry required. The same can be disclosed in notes to financial statements so as to give information of this case of all the stakeholders. This is due to conservative approach. Contingent Assets are recorded to ledgers only if they are certain. As there is no certainty to win the case, same can not be posted to General Ledger.
2.) of all the stakeholders. The contingent liability should not be accrued because the loss in not probable. The note should indicate the range of the possible loss.
3.) Loss Dr 5
Contingent Liability Cr 5
Note: Disclose the nature of liability, amount of suit, nature of contingency, reason and range of the possible loss. Liability should be recorded as it is probable to incur and amount of loss can be reasonably estimated. In case of range of possible loss, provision should be made of lower amount.