The Following Events Were Incurred by Golden Corporation During 2010

Essay

The following events were incurred by Golden Corporation during 2010.
·A competitor sued Golden for patent infringement. Golden's attorney believes that likelihood of the competitor winning the suit is probable and the estimated loss is expected at $1,000,000.
·A customer sued Golden for damages arising from product defects. Golden's attorney believes that the likelihood of Golden losing the suit is reasonably probable; however, the potential loss cannot be estimated.
·A major stockholder sued Golden for financial damages arising from the company's accounting restatements. Golden's attorney believes the likelihood of an unfavorable verdict is remote, but estimated losses could be between $0 and $10,000.
Required:
Required:
a. Prepare journal entries for those contingent liabilities that require recognition in Golden's financial statements in 2010.
b. Which, if any, of these contingent liabilities require financial statement disclosure?
c. Assume that the patent infringement lawsuit was settled in late 2011 for $1,240,000. Prepare the journal entry to record the settlement.