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Bell Co. is a defendant in a lawsuit that could result in a large payment to the plaintiff. Bell’s attorney believe that there is a 90% chance that Bell will lose the suit, and estimates that the loss will be anywhere from $5,000,000 to $2,000,000 and possibly as much as $30,000,000. None of the estimate are better than the others. What amount of liability should Bell report on its balance sheet related to the lawsuit?
a. $5,000,000
b. $0
c. $30,000,000
d. $20,000,000
The answer is “a”. Is the 90% indicate this is probable contingency? So how much chance is probable, reasonably possible and remote respectively? Thanks
AUD-74,75 11/2014
REG-80 04/2015
FAR-74, 91 11/2015
BEC-79 08/2015
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