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?

Individual Income Taxes
43rd Edition
ISBN:9780357109731
Author:Hoffman
Publisher:Hoffman
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 35CE
icon
Related questions
Question

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.

  1. 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?
  2. What amount, if any, would North Shore record related to the insurance settlement under IFRS and US GAAP?
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Individual Income Taxes
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
SWFT Comprehensive Volume 2019
SWFT Comprehensive Volume 2019
Accounting
ISBN:
9780357233306
Author:
Maloney
Publisher:
Cengage
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage
SWFT Individual Income Taxes
SWFT Individual Income Taxes
Accounting
ISBN:
9780357391365
Author:
YOUNG
Publisher:
Cengage
SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:
9780357391266
Author:
Nellen
Publisher:
Cengage