Fisher Company Has Been Named as the Defendant in a Class

question 42

Short Answer

Fisher Company has been named as the defendant in a class action lawsuit.Indicate whether each of the following statements regarding the lawsuit is true or false.
_____ a)If the outcome is likely,a liability should be recognized on the balance sheet for the full amount of the suit,even if the company's attorneys estimate the outcome to be much lower.
_____ b)If the outcome is likely,but cannot be reasonably estimated,the contingency should be disclosed in the notes to the financial statements.
_____ c)If the outcome is reasonably possible,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)If an active hurricane season has been predicted for the Florida gulf coast,businesses in that region should not disclose contingencies for catastrophic loss in the notes to their financial statements.

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Definitions:

Consistent

In mathematics, particularly in systems of equations, it refers to a system that has at least one solution.

Inconsistent

A term describing systems of equations that have no solution, as their lines or planes do not intersect.

Solutions

The values or sets of values that satisfy the conditions of an equation or inequality.

Infinite Solutions

A condition in which an equation or system of equations has an unlimited number of solutions.