Wilhelm Company prepares its financial statements according to International Accounting Standards (IFRS). It recently estimated that it has a 55 percent chance of losing a lawsuit. Assuming Wilhelm can reliably estimate the amount it would pay if it loses the lawsuit, it should. a. Accrue a liability for the lawsuit. b. Disclose the matter in the notes to the financial statements but not accrue a liability for the lawsuit. c. Make no mention of the lawsuit in the financial statements or notes. d. None of the above.
Wilhelm Company prepares its financial statements according to International Accounting Standards (IFRS). It recently estimated that it has a 55 percent chance of losing a lawsuit. Assuming Wilhelm can reliably estimate the amount it would pay if it loses the lawsuit, it should. a. Accrue a liability for the lawsuit. b. Disclose the matter in the notes to the financial statements but not accrue a liability for the lawsuit. c. Make no mention of the lawsuit in the financial statements or notes. d. None of the above.
(b)
Under IFRS, disclosing the matter in the notes to the financial statement by not accruing a liability for the lawsuit does not provide the Company W 55% chance of losing a lawsuit. Hence it is an incorrect answer.
(c)
Without mentioning the lawsuit in the financial statement or in disclosure notes does not provide the Company W 55% chance of losing a lawsuit. Hence it is an incorrect answer.
(d)
This option is not relevant to the answer. Hence it is an incorrect answer.
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