Fisher Company Has Been Named as the Defendant in a Class

question 35

Short Answer

Fisher Company has been named as the defendant in a class action lawsuit.In addition,the company is located in a region that normally has an active hurricane season.Indicate whether each of the following statements is true or false.
________ a)If the likelihood of a future obligation is probable and can be reasonably estimated,a liability should be recognized on the balance sheet.
________ b)If the outcome is probable,but cannot be reasonably estimated,the contingency should be disclosed in the notes to the financial statements.
________ c)If the outcome is reasonably possible but not likely,the contingency should be disclosed in the notes to the financial statements.
________ d)Every lawsuit,regardless how frivolous,should be disclosed in the notes to the financial statements.
________ e)Since it is located in a region for which an active hurricane season has been predicted,the company must disclose the contingent liability,which is the potential for catastrophic loss,in the notes to their financial statements.

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Definitions:

Time Frames

Time frames are specified periods during which certain actions are to be undertaken or events are expected to occur.