Bugs, Inc., a wholly owned subsidiary of the U.S.-based company, Pillows Ltd., was notified of a loss contingency with an estimated cost ranging between $50,000 and $150,000. Bugs, Inc. hired an expert appraiser who assessed that all possible dollar amounts of liability in this range are equally likely. Management of Bugs, Inc. has estimated that there is a 60 percent chance that this contingency will result in an actual loss. In the conversion from U.S. GAAP financial statements to IFRS financial statements, what is the amount of adjustment needed to adjust for the difference in accounting for a provision for loss contingency?

Multiple Choice

a. $0

b. $50,000

c. $100,000

d. $150,000

e. $200,000

Answer rating: 100% (QA)

a0 USD 100000 of provision is to be adjusted while conversion from US GAAP financial statements to I... View the full answer