Multiple Choice
A suit for breach of contract seeking damages of $3,000,000 was filed against Clark Corporation on March 1, 2009. 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 2009. What accounting is necessary for the year ending June 30, 2009?
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
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