The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus's fiscal year ends on...
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The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus's fiscal year ends on December 31. Financial statements are issued in March 2025. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,600,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,600,000 to $4,600,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $5,600,000, with a present value of $4,100,000. 4. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, the judgment will be $1,600,000. 5. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is virtually certain that the company eventually will prevail in court, and that if it prevails, the judgment will be $800,000. Classification 1. 23 2. 3. 5. 45 4. Amount The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus's fiscal year ends on December 31. Financial statements are issued in March 2025. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,600,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,600,000 to $4,600,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $5,600,000, with a present value of $4,100,000. 4. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, the judgment will be $1,600,000. 5. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is virtually certain that the company eventually will prevail in court, and that if it prevails, the judgment will be $800,000. Classification 1. 23 2. 3. 5. 45 4. Amount
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Answer Lets address each circumstance and indicate how Erismus would record the related lawsuit Erismus is defending against a lawsuit Management beli... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1259548185
8th edition
Authors: David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
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