A Suit for Breach of Contract Seeking Damages of $3,000,000

question 21

Multiple Choice

A suit for breach of contract seeking damages of $3,000,000 was filed against Clark Corporation on March 1, 2009. Clark's legal counsel believes that a negative outcome is highly probable. A reasonable estimate of the court's award to the plaintiff is $600,000. Settlement is expected to occur during the latter part of 2009. What accounting is necessary for the year ending June 30, 2009?

• A) Note disclosure only
• B) Accrue a contingent liability of $3,000,000 and provide note disclosure explaining the contingency
• C) Accrue a contingent liability of $600,000 and provide note disclosure explaining the contingency
• D) No disclosure or accrual necessary

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Definitions:

Adaptability Skills

Skills that enable individuals to adjust to changes and new conditions in their work environment efficiently.

Training

Is a planned attempt by an organization to facilitate employee learning of job-related knowledge, skills, and behaviors.

Expatriate Managers

Employees sent by their companies to work in a foreign country, representing and managing the company's interests abroad.

Social Exchanges

Social exchanges refer to the mutual and dynamic interactions of resources, information, or services between individuals or groups, often analyzed in social psychology and sociology to understand social structures and relationships.