This Year, Port City Was Sued for Injuries Sustained When

question 68

Multiple Choice

This year, Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps. The city attorney estimates the city will be held liable by the courts and a judgment of $300,000 will result. Because of the nature of the case it will likely be four years before the city makes any payment related to the accident. The present value of the likely future payment is $251,000. In the government-wide financial statements, at the end of the current fiscal year, Port City should recognize a liability of

• A) $300,000.
• B) $251,000.
• C) $0.
• D) $75,000.

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Definitions:

Temptation To Misrepresent

The urge or inclination to distort or falsify information, often encountered in negotiations where one party may see an advantage in not being entirely truthful.

Self-fulfilling Logic

A belief or expectation that, purely as a result of being held, causes itself to become true.

Ethical Criteria

Standards or principles that guide moral conduct and decision-making in various contexts.

Appropriate Conduct

Behavior that is deemed suitable or fitting in a particular context or situation.