On Nov. 25, 2017, an explosion occurred at Stefan company causing extensive property damage to area buildings. By March 10, 2018, claims had been asserted against the entity. The management and counsel concluded that it is probable that the entity would be responsible for damages, and that 3,500,000 is a reasonable estimate of the liability. Stefan’s 10,000,000 comprehensive public policy has a 500,000 deductible clause. The financial statements were issued on March 31, 2018. What amount of liability from lawsuit should be reported on December 31, 2017?
On Nov. 25, 2017, an explosion occurred at Stefan company causing extensive property damage to area buildings. By March 10, 2018, claims had been asserted against the entity. The management and counsel concluded that it is probable that the entity would be responsible for damages, and that 3,500,000 is a reasonable estimate of the liability. Stefan’s 10,000,000 comprehensive public policy has a 500,000 deductible clause. The financial statements were issued on March 31, 2018. What amount of liability from lawsuit should be reported on December 31, 2017?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On Nov. 25, 2017, an explosion occurred at Stefan company causing extensive property damage to area buildings. By March 10, 2018, claims had been asserted against the entity. The management and counsel concluded that it is probable that the entity would be responsible for damages, and that 3,500,000 is a reasonable estimate of the liability. Stefan’s 10,000,000 comprehensive public policy has a 500,000 deductible clause. The financial statements were issued on March 31, 2018. What amount of liability from lawsuit should be reported on December 31, 2017?
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