Pitchfork Company is being sued by a competitor in a lawsuit alleging patent infringement. Pitchfork's lawyers state that it is possible Pitchfork will lose the suit and be found liable for a judgment costing anywhere from $1,800,000 to $9,000,000. However, the lawyers state that no one estimate is more likely. As a result of the above information, Pitchforks should report: O a contingent liability in the amount of $5,400,000, representing the average amount within the range of damages, on its Balance Sheet and disclose an additional contingency of up to $3,600,000 in the notes to the Balance Sheet. a contingent liability in the amount of $1,800,000 on its Balance Sheet and disclose an additional contingency of up to $7,200,000 in the notes to the Balance Sheet. a contingent liability in the amount of $5,400,000 on its Balance Sheet, but not disclose any additional contingency. a possible contingency of between $1,800,000 and $9,000,000 only in the notes of the 10K.
Pitchfork Company is being sued by a competitor in a lawsuit alleging patent infringement. Pitchfork's lawyers state that it is possible Pitchfork will lose the suit and be found liable for a judgment costing anywhere from $1,800,000 to $9,000,000. However, the lawyers state that no one estimate is more likely. As a result of the above information, Pitchforks should report: O a contingent liability in the amount of $5,400,000, representing the average amount within the range of damages, on its Balance Sheet and disclose an additional contingency of up to $3,600,000 in the notes to the Balance Sheet. a contingent liability in the amount of $1,800,000 on its Balance Sheet and disclose an additional contingency of up to $7,200,000 in the notes to the Balance Sheet. a contingent liability in the amount of $5,400,000 on its Balance Sheet, but not disclose any additional contingency. a possible contingency of between $1,800,000 and $9,000,000 only in the notes of the 10K.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pitchfork Company is being sued by a competitor in a lawsuit alleging patent infringement.
Pitchfork's lawyers state that it is possible Pitchfork will lose the suit and be found liable for a
judgment costing anywhere from $1,800,000 to $9,000,000. However, the lawyers state that no
one estimate is more likely.
As a result of the above information, Pitchforks should report:
a contingent liability in the amount of $5,400,000, representing the average amount within the range of
damages, on its Balance Sheet and disclose an additional contingency of up to $3,600,000 in the notes to
the Balance Sheet.
a contingent liability in the amount of $1,800,000 on its Balance Sheet and disclose an additional
contingency of up to $7,200,000 in the notes to the Balance Sheet.
a contingent liability in the amount of $5,400,000 on its Balance Sheet, but not disclose any additional
contingency.
O a possible contingency of between $1,800,000 and $9,000,000 only in the notes of the 10K.
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