Carpenter, Inc

question 64

Multiple Choice

Carpenter, Inc., a wholly owned subsidiary of the U.S.-based company, Buildings Ltd., was notified of a loss contingency with an estimated cost ranging between $100,000 and $220,000. Carpenter, Inc. hired an expert appraiser who assessed that all possible dollar amounts of liability in this range are equally likely. Management of Carpenter, Inc. has estimated that there is a 65 percent chance that this contingency will result in an actual loss.In the conversion from U.S. GAAP financial statements to IFRS financial statements, what is the amount of adjustment needed to adjust for the difference in accounting for a provision for loss contingency?

• A) $0
• B) $100,000
• C) $160,000
• D) $120,000
• E) $220,000

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Definitions:

Emotion-Focused Coping

A stress management strategy that involves dealing with stress by managing one's emotional response to the stressor rather than addressing the stressor itself.

Type A Personality

A personality type characterized by competitiveness, high ambition, impatience, and a sense of urgency, often associated with a higher risk of heart disease.

Type B Personality

A personality characterized by a less competitive, more relaxed, and less stress-prone behavior pattern.

Social Support

The perception or reality of receiving support, encouragement, and assistance from friends, family, and others.