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A company is facing a class-action lawsuit in the upcoming year. It is possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000. How would this fact be reported
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A company is facing a class-action lawsuit in the upcoming year. It is possible, but not probable, that the company will have to pay a settlement of approximately $2,000,000. How would this fact be reported in the financial statements to be issued at the end of the current month

User Omiz
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1 Answer

23 votes
23 votes

Answer:

Disclose the $2,000,000 as a Contingent Liability in the Notes

Step-by-step explanation:

The Company shall Disclose the $2,000,000 as a Contingent Liability in the Notes.

A Contingent Liability is a Liability whose timing or amount is uncertain

User Ruben
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