Burger Barn Has Been Named as a Plaintiff in a $5

question 102

Multiple Choice

Burger Barn has been named as a plaintiff in a $5 million lawsuit filed by a customer over the addictive nature of the company's french fries.Burger Barn's attorneys have advised them that the likelihood of a future obligation from the suit is remote.As a result of the lawsuit,Burger Barn should:

• A)Disclose the lawsuit in the notes to the financial statements.
• B)Recognize a $5 million liability on its balance sheet for the contingency.
• C)Ignore the lawsuit in its financial statements.
• D)Settle with the customer immediately for $5 million to avoid harmful publicity.

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Definitions:

Mexican Revolution

A major armed struggle from 1910 to 1920 that radically transformed Mexican culture and government, leading to the end of the dictatorship of Porfirio Diaz.

Controlled Panama

Reference to a period or situation in which Panama was under the control or significant influence of another state or entity, such as U.S. control over the Panama Canal Zone in the 20th century.

Panama Canal

A man-made 48-mile waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean, greatly facilitating international maritime trade by providing a significantly shorter passage for ships than going around the southern tip of South America.