Pine Systems' revenues for 2018 totaled $27.1 million. As with most companies, Pine is a defendant in lawsuits related to its products. Note 14 of the Pine annual report for 2018 reported the following: (Click the icon to view the note.) Read the requirements. Requirement 1. Suppose Pine's lawyers believe that a significant legal judgment against the company is reasonably possible. How should Pine report this situation in its financial statements? First, let's decide how the lawsuit should be reported in the financial statements. The lawsuit should More Info Requirements 14. Contingencies The company is involved in various legal proceedings.... It is the Company's policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable 1. Suppose Pine's lawyers believe that a significant legal judgment against the company is reasonably possible. How should Pine report this situation in its financial statements? Print Done 2. Suppose Pine's lawyers believe it is probable that a $2.1 million judgment will be rendered against the company. In general terms, how would this situation be reported in Pine's financial statements (using U.S. GAAP)? Print Done
Pine Systems' revenues for 2018 totaled $27.1 million. As with most companies, Pine is a defendant in lawsuits related to its products. Note 14 of the Pine annual report for 2018 reported the following: (Click the icon to view the note.) Read the requirements. Requirement 1. Suppose Pine's lawyers believe that a significant legal judgment against the company is reasonably possible. How should Pine report this situation in its financial statements? First, let's decide how the lawsuit should be reported in the financial statements. The lawsuit should More Info Requirements 14. Contingencies The company is involved in various legal proceedings.... It is the Company's policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable 1. Suppose Pine's lawyers believe that a significant legal judgment against the company is reasonably possible. How should Pine report this situation in its financial statements? Print Done 2. Suppose Pine's lawyers believe it is probable that a $2.1 million judgment will be rendered against the company. In general terms, how would this situation be reported in Pine's financial statements (using U.S. GAAP)? Print Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pine Systems' revenues for 2018 totaled $27.1 million. As with most companies, Pine is a defendant in lawsuits related to its products. Note 14 of the Pine annual report for 2018 reported the following:
(Click the icon to view the note.)
Read the requirements.
Requirement 1. Suppose Pine's lawyers believe that a significant legal judgment against the company is reasonably possible. How should Pine report this situation in its financial statements?
First, let's decide how the lawsuit should be reported in the financial statements.
The lawsuit should
More Info
Requirements
14. Contingencies
The company is involved in various legal proceedings.... It is the Company's
policy to accrue for amounts related to these legal matters if it is probable that a
liability has been incurred and an amount is reasonably estimable
1.
Suppose Pine's lawyers believe that a significant legal judgment against the
company is reasonably possible. How should Pine report this situation in its
financial statements?
Print Done
2. Suppose Pine's lawyers believe it is probable that a $2.1 million judgment will
be rendered against the company. In general terms, how would this situation
be reported in Pine's financial statements (using U.S. GAAP)?
Print Done
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