Reeves Company filed suit against Higgins, Incorporated, seeking damages for copyright violations. Higgins' legal counsel believes it is probable that Higgins will settle the lawsuit for an estimated amount in the range of $150,000 to $250,000, with all amounts in the range considered equally likely. How should Higgins report this litigation? Multiple Choice О As a liability for $150,000 with disclosure of the range As a liability for $200,000 with disclosure of the range In a disclosure only, no liability is reported

Reeves Company filed suit against Higgins, Incorporated, seeking damages for copyright violations. Higgins' legal counsel believes it is probable that Higgins will settle the lawsuit for an estimated amount in the range of $150,000 to $250,000, with all amounts in the range considered equally likely. How should Higgins report this litigation? Multiple Choice О As a liability for $150,000 with disclosure of the range As a liability for $200,000 with disclosure of the range In a disclosure only, no liability is reported

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

Reeves Company filed suit against Higgins, Incorporated, seeking damages for copyright violations. Higgins' legal counsel believes it is probable that
Higgins will settle the lawsuit for an estimated amount in the range of $150,000 to $250,000, with all amounts in the range considered equally likely.
How should Higgins report this litigation?
Multiple Choice
As a liability for $150,000 with disclosure of the range
As a liability for $200,000 with disclosure of the range
In a disclosure only, no liability is reported
As a liability for $250,000 with disclosure of the range

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