Darren Company Becomes Aware of a Lawsuit After the Date

question 146

Multiple Choice

Darren Company becomes aware of a lawsuit after the date of the financial statements, but before they are issued. A loss and related liability should be reported in the financial statements if the amount can be reasonably estimated, an unfavorable outcome is highly probable, and

• A) the Darren Company admits guilt.
• B) the court will decide the case within one year.
• C) the damages appear to be material.
• D) the cause for action occurred during the accounting period covered by the financial statements.

---

Definitions:

Chemical Synapse

A chemical synapse is a type of synapse that utilizes chemical messengers, known as neurotransmitters, to transmit signals between neurons across a synaptic gap.

Presynaptic Terminal

The end point of a neuron where neurotransmitters are stored before being released into the synaptic cleft.

Receptor Molecules

Specialized proteins located on the surface of or within cells, which bind to specific substances, leading to a cellular response.

Specificity

The ability of a test or biological mechanism to accurately identify a particular substance or pathogen without cross-reacting with other substances.