Swell Company has a lawsuit pending from a customer claiming damages of $100,000. Swell’s attorney advises that the likelihood the customer will win is remote. GAAP requires at a minimum that this contingent liability be a. disclosed in the footnotes. b. disclosed in the footnotes, with ranges of potential loss. c. recorded as a journal entry, as well as disclosed in the footnotes. d. No disclosure is required.

Swell Company has a lawsuit pending from a customer claiming damages of $100,000. Swell’s attorney advises that the likelihood the customer will win is remote. GAAP requires at a minimum that this contingent liability be a. disclosed in the footnotes. b. disclosed in the footnotes, with ranges of potential loss. c. recorded as a journal entry, as well as disclosed in the footnotes. d. No disclosure is required.

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 12MCQ

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