A customer got serious food poisoning from Chix Now restaurant on April 30, 20x2, necessitating a trip to the emergency room. On May 6, 20x2, the customer initiated a lawsuit. At December 31, 20x2, Chix Now estimated its probable loss to be $100,000. In January, 20x3, before issuance of Chix Now's financial statements, a judge ruled in favor of the customer and awarded the customer $120,000 in damages. 

Must the company recognize the effects of this ruling in its 20x2 financial statements? Explain.

Answer rating: 100% (QA)

SOLUTION The company must recognize the effects of the lawsuit in its 20x2 financial statements if it meets the requirements for recognition under gen... View the full answer