Question

The ink-jet printing division of Environmental Printing has grown tremendously in recent years. Assume the following transactions related to the ink-jet division occur during the year ended December 31, 2015.

Required:
Record any amounts as a result of each of these contingencies.
1. Environmental Printing is being sued for $11 million by Addamax. Plaintiff alleges that the defendants formed an unlawful joint venture and drove it out of business. The case is expected to go to trial later this year. The likelihood of payment is reasonably possible.
2. Environmental Printing is the plaintiff in an $9 million lawsuit filed against a competitor in the high-end color-printer market. Environmental Printing expects to win the case and be awarded between $6.5 and $9 million.
3. Environmental Printing recently became aware of a design flaw in one of its ink-jet printers. A product recall appears probable. Such an action would likely cost the company between $500,000 and $900,000.



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  • CreatedJuly 15, 2014
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