Microsoft Corporation is the defendant in numerous lawsuits claiming unfair tradepractices. Microsoft has strong incentives not to disclose these contingent liabilities. However,U.S. GAAP requires that companies report their contingent liabilities.Requirements1. Why would a company prefer not to disclose its contingent liabilities?2. Identify the parties involved in the decision and the potential consequences to each.3. Analyze the issue of whether to report contingent liabilities from lawsuits from thefollowing standpoints:a. Economicb. Legalc. Ethical4. What impact could future changes in accounting standards, both at the U.S. level and theinternational level, likely have on the issue of disclosure of loss contingencies?
Microsoft Corporation is the defendant in numerous lawsuits claiming unfair trade
practices. Microsoft has strong incentives not to disclose these
U.S. GAAP requires that companies report their contingent liabilities.
Requirements
1. Why would a company prefer not to disclose its contingent liabilities?
2. Identify the parties involved in the decision and the potential consequences to each.
3. Analyze the issue of whether to report contingent liabilities from lawsuits from the
following standpoints:
a. Economic
b. Legal
c. Ethical
4. What impact could future changes in accounting standards, both at the U.S. level and the
international level, likely have on the issue of disclosure of loss contingencies?
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