Macromedia, Inc., is the original maker of shockwave and flash technologies. One of its annual reports indicated

Question:

Macromedia, Inc., is the original maker of shockwave and flash technologies. One of its annual reports indicated that a lawsuit had been filed against the company and five of its former officers for securities fraud in connection with allegedly making false or misleading statements about its financial results. The lawsuit was settled out of court, as described in the following note:
Legal
The settlement amount was $ 48.0 million, of which approximately $ 19.5 million was paid by insurance. As a result, the Company recorded a $ 28.5 million charge as a component of other income (expense) in its consolidated statements of operations.
Required:
Macromedia did not record a liability or include a note to the financial statements prior to settling the lawsuit. Which of the following best describes the estimated likelihood of loss prior to settling the lawsuit: (a) probable, (b) reasonably possible, or (c) remote?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals of Financial Accounting

ISBN: 978-0078025914

5th edition

Authors: Fred Phillips, Robert Libby, Patricia Libby

Question Posted: