Your company is immersed in a legal dispute over a patent. He lost the first round in court, but has appealed. Despite the appeal, his lawyers tell him that he will most likely end up paying $500,000. They say that if things go very well he may only pay $25,000, but things could also go very badly and he 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 this situation it is important to consider the principles of accounting for contingencies such as ... View the full answer