Multiple Choice
A suit for breach of contract seeking damages of $3,000,000 was filed against Clark Corporation on March 1, 2017. Clark's legal counsel believes that a negative outcome is highly probable. A reasonable estimate of the court's award to the plaintiff is $600,000. Settlement is expected to occur during the latter part of 2017. What accounting is necessary for the year ending June 30, 2017?
A) Note disclosure only
B) Accrue a contingent liability of $3,000,000 and provide note disclosure explaining the contingency
C) Accrue a contingent liability of $600,000 and provide note disclosure explaining the contingency
D) No disclosure or accrual necessary
Correct Answer:
Verified
Correct Answer:
Verified
Q1: Accounts payable typically arise because<br>A)cash is received
Q2: On July 1, Gordon Company borrowed $10,000
Q4: What business transaction must occur in order
Q5: Which one of the following is a
Q6: If a loss contingency related to a
Q7: Contingent liabilities whose ultimate payment is remote
Q8: Which one of the following events decreases
Q9: Use the information from Cen, Inc.
Q10: Why are gain contingencies typically omitted from
Q11: An increase in a deferred tax liability