Use the Following to Answer Questions 33 and 34

question 54

Multiple Choice

Use the following to answer questions 33 and 34:
REFERENCE 11-02
Bugs, Inc., a wholly owned subsidiary of the U.S.-based company, Pillows Ltd., was notified of a loss contingency with an estimated cost ranging between $50,000 and $150,000. Bugs, Inc. hired an expert appraiser who assessed that all possible dollar amounts of liability in this range are equally likely. Management of Bugs, Inc. has estimated that there is a 60 percent chance that this contingency will result in an actual loss.
[QUESTION]
REFER TO: 11-02
-According to U.S.GAAP, what is the amount recognized by Bugs, Inc.as a provision for loss contingency?

• A) No amount will be recorded but an amount will be disclosed in the notes to the financial statements.
• B) $50,000
• C) $60,000
• D) $100,000
• E) $150,000

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Definitions:

Sensory Register

A part of the memory system where sensory information is temporarily stored before being processed, acting as a buffer for stimuli received through the senses.

Information-Processing Theorists

Information-Processing Theorists study how human beings process, store, retrieve, and utilize information, likening the mind to a computer.

Short-Term Memory

The capacity for holding a small amount of information in an active, readily available state for a short period of time.

Control Processes

Pertains to mechanisms or systems that regulate, guide, or manage operations or activities in various contexts such as biology, psychology, or engineering.