For each of the following independent situations, indicate whether it should be
(1) Recorded,
(2) Disclosed,
(3) Neither recorded nor disclosed.
Explain your reasoning and indicate if the accounting treatment would be the same or different under IFRS and ASPE.
(a) A customer has sued a company for $1 million. Currently the company is unable to determine if it will win or lose the lawsuit.
(b) A customer has sued a company for $1 million. The company will likely lose the lawsuit.
(c) A competitor has sued a company for $2 million. The lawyers have advised that there is a 55% chance that the company will lose the lawsuit.
(d) A company has guaranteed a $300,000 loan for one of its key suppliers. The supplier has a good credit rating and is not expected to default on the loan.