On December 15, 2023, an employee filed a lawsuit against Bojack Company fo amages suffered when one of Bojack's equipment malfunctioned in August of 023. The legal counsel of the company believes that it is probable that Bojack vill pay the following damages:
On December 15, 2023, an employee filed a lawsuit against Bojack Company fo amages suffered when one of Bojack's equipment malfunctioned in August of 023. The legal counsel of the company believes that it is probable that Bojack vill pay the following damages:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![On December 15, 2023, an employee filed a lawsuit against Bojack Company for
damages suffered when one of Bojack's equipment malfunctioned in August of
2023. The legal counsel of the company believes that it is probable that Bojack
will pay the following damages:
Probability
Estimated Litigation Cost
50%
P400,000
30%
700,000
20%
550,000
Bojack Company provided a 10% risk adjustment factor.
Using the expected value method, how much is the provision that should be
recognized by Bojack Company on December 31, 2023?
O 572,000
O 1,650,000
O 1,815,000
O 520,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c320dfa-7ffd-4301-a067-3f8f1154c39b%2F4e752b36-9917-46fa-90d9-fd304196cbe4%2Fsbt1ymh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On December 15, 2023, an employee filed a lawsuit against Bojack Company for
damages suffered when one of Bojack's equipment malfunctioned in August of
2023. The legal counsel of the company believes that it is probable that Bojack
will pay the following damages:
Probability
Estimated Litigation Cost
50%
P400,000
30%
700,000
20%
550,000
Bojack Company provided a 10% risk adjustment factor.
Using the expected value method, how much is the provision that should be
recognized by Bojack Company on December 31, 2023?
O 572,000
O 1,650,000
O 1,815,000
O 520,000
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