Delta Company is being sued for $5,000,000 for an injury caused to a child as a...
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Delta Company is being sued for $5,000,000 for an injury caused to a child as a result of alleged negligence while the child was visiting the Delta Company plant in March 2018. The suit was filed in July 2018. Delta's lawyer states that it is probable that Delta will lose the suit and be found liable for a judgment costing anywhere from $400,000 to $5,000,000. However, the lawyer states that the most probable judgment is $2,000,000. Discuss the following issues: • How should Delta report the suit in its 2018 financial statements, given the facts as stated? Discuss the rationale for your answer. Include in your answer disclosures, if any, that should be made in Delta's financial statements or notes. • If you are the CFO, why might you press the attorney to soften his conclusion regarding the upcoming case? Would take such action? Delta Company is being sued for $5,000,000 for an injury caused to a child as a result of alleged negligence while the child was visiting the Delta Company plant in March 2018. The suit was filed in July 2018. Delta's lawyer states that it is probable that Delta will lose the suit and be found liable for a judgment costing anywhere from $400,000 to $5,000,000. However, the lawyer states that the most probable judgment is $2,000,000. Discuss the following issues: • How should Delta report the suit in its 2018 financial statements, given the facts as stated? Discuss the rationale for your answer. Include in your answer disclosures, if any, that should be made in Delta's financial statements or notes. • If you are the CFO, why might you press the attorney to soften his conclusion regarding the upcoming case? Would take such action?
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Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
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