\fProblem #g | 10 Marks [ Osca r is an accounting coop student. He is presently working on the 2021 financial statements for Simon Companyand encountered the below situations. Simon has a December 31 Fiscal year-end and is a public company. a] Provision for Loss Due to Lawsuit ............................................................ 10,000,000 Provision For Liability Due to Lawsuit ............................................... 10,000,000 To setu p a losslliability as the company is being sued by a former employee for $10,000,000. Our lawyers say it is probable thatwe will lose the case and that $10,000,000 is a reasonable estimate onhat we will have to pay. b) No entry and no note disclosure. Simon Company is being sued due to a workplace accident. Our lawyers say that it is not determinable at this time whether we will win or lose the lawsuit. c] Note disclosure. The company may suffer substantialfinancial losses due to the possibility ofa recession in 2022. d) Provision for Loss Due to Lawsuit ................. 15,000,000 Provision for Liability Due to Lawsuit.... 15,000,000 To set up a lossfliability as the company is being sued clue to a defective product. Our lawyers say that it is unlikely that we will lose the lawsuit and need to pay $15,000,000 [ best estimate it did lose the lawsuit would have substantial negative effecton the company ). e) Provision for Gain Due to Lawsuit ............................................................ "3,000,000 Provision for Receivable Due to Lawsuit... 7,0 00,000 To set up an assetl-'gain related to a lawsuit that Simon has filed against another company. Our lawyers say that it is virtually certain that we will win the lawsuit and receive $?,000,000. Instructions: Explain whether Oscar's accou ntingtreatment for each ofthe above situations is correct or incorrect. If you agree that what was done was correct, state so. If not, provide the correctjou rnal entry, state that only a note disclosure is required, or state that neither are required. (2 marks each situation) PAGE 15 \f