Question: Buzz Coffee Shops is famous for its large servings of hot coffee. After a famous case involving McDonalds, the lawyer for Buzz warned management (during

Buzz Coffee Shops is famous for its large servings of hot coffee. After a famous case involving McDonald’s, the lawyer for Buzz warned management (during 2011) that it could be sued if someone were to spill hot coffee and be burned: “With the temperature of your coffee, I can guarantee it’s just a matter of time before you’re sued for $1,000,000.” Unfortunately, in 2012 the prediction came true when a customer filed suit. The case went to trial in 2013, and the jury awarded the customer $400,000 in damages, which the company immediately appealed. During 2014 the customer and the company settled their dispute for $150,000. What is the proper reporting of this liability each year?

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