A B 1 Question 2 - Measurement (8 marks) C D E F G 2 Please only enter your response in the blue cells. This is the only area that will be graded. 3 Macrosoft Ltd. has a lawsuit outstanding. They know that although the exact amount of the settiment is unknown, the lawsuit liability must be recorded in the 2021 financial statements. Macrosoft Ltd. has decided to use the expected cash flow approach to come up with an estimate of the liablity. They have deterimined that the risk free rate is 5% and the risk adjusted rate is 7%. Cash flow estimates and the related probabilities of the settlement are as follows: 4 5 Year Cash Flow Estimate Probability Assessment 6 2021 15,000 30% 7 25,000 45% 8 35,000 25% 9 10 2022 3,200 20% 11 5,400 50% 12 7.100 30% 211 13 3 14 15 Required: Determine an estimate of the entire liability to be recorded in the 2021 financial statements using the expected cash flow 16 approach. 18 19