At December 31, 2013 ChaCha Company has the following three separate lawsuits pending against it: Suit...

 

Transcribed Image Text:

At December 31, 2013 ChaCha Company has the following three separate lawsuits pending against it: Suit A-Plaintiffs seek damages of $40,000; it is remote that ChaCha will lose the suit. Suit B-Plaintiff seeks damages of $200,000; it is approximately 35% possible that ChaCha will lose the case; lawyers estimate the possible loss is $40,000. Suit C-Plaintiff seeks damages of $20,000; it is probable that ChaCha will lose the case; lawyers estimate that ChaCha will be liable for the full loss of $20,000. For Suit C, should ChaCha: Accrue and Disclose, Disclose Only, or Do Nothing? Accrue and disclose Disclose only Do nothing At December 31, 2013 ChaCha Company has the following three separate lawsuits pending against it: Suit A-Plaintiffs seek damages of $40,000; it is remote that ChaCha will lose the suit. Suit B-Plaintiff seeks damages of $200,000; it is approximately 35% possible that ChaCha will lose the case; lawyers estimate the possible loss is $40,000. Suit C-Plaintiff seeks damages of $20,000; it is probable that ChaCha will lose the case; lawyers estimate that ChaCha will be liable for the full loss of $20,000. For Suit C, should ChaCha: Accrue and Disclose, Disclose Only, or Do Nothing? Accrue and disclose Disclose only Do nothing

Answer rating: 100% (QA)

According to generally accepted accounting principles GAAP a business should accrue a loss from a la... View the full answer