Question 3 Your company is in a legal dispute over a patent. You lost the first round in court, but have appealed. Despite the appeal, your attorneys tell you that you will most likely end up paying $500,000. They say if things go really well you may only pay $25,000, but things could also go really poorly and you would end up paying $1,000,000. What amount, if any, should you record on your balance sheet and income statement for this period?

Answer rating: 100% (QA)

In accounting contingent liabilities like legal disputes are recorded when it is probable that a lia... View the full answer