Asian LLC is facing 25 legal claims all related to the same issue, each of which has a 45% likelihood of successful outcome (i.e., no payment to be made by Asian LLC) and a 55% likelihood of unfavorable outcome, with each adverse claim expected to result in an outflow of OMR 100,000. Management has calculated the amount to be recognized as a provision in the annual financial statements. Which of the following is the correct amount? a- OMR 1,125,000 b- None of them c- OMR 1,375,000 d- OMR 55,000
Asian LLC is facing 25 legal claims all related to the same issue, each of which has a 45% likelihood of successful outcome (i.e., no payment to be made by Asian LLC) and a 55% likelihood of unfavorable outcome, with each adverse claim expected to result in an outflow of OMR 100,000. Management has calculated the amount to be recognized as a provision in the annual financial statements. Which of the following is the correct amount? a- OMR 1,125,000 b- None of them c- OMR 1,375,000 d- OMR 55,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Asian LLC is facing 25 legal claims all related to the same issue, each of which has a 45% likelihood of successful outcome (i.e., no payment to be made by Asian LLC) and a 55% likelihood of unfavorable outcome, with each adverse claim expected to result in an outflow of OMR 100,000. Management has calculated the amount to be recognized as a provision in the annual financial statements. Which of the following is the correct amount?
a- OMR 1,125,000
b- None of them
c- OMR 1,375,000
d- OMR 55,000
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