Bill Deere Tractors manufactures and sells all types of yard equipment. The company was recently sued by a plaintiff who claimed that a defective lawnmower caused a serious injury. The company was made aware of this at the end of its fiscal year but it is not sure how to report it in its financial statements.
Required
Write a brief memo explaining the possible treatments of this lawsuit for financial reporting purposes. Also, provide some ideas on how to estimate the potential liability if the company believes that liability is probable.