Analyze the Following Independent Situations

question 83

Essay

Analyze the following independent situations.
Required: For each situation,state the likelihood of a future event and state how the contingency will be reported.
a.Company A estimates it will have to pay $85,000 in warranty repairs next year.
b.Company B is being sued by a customer.Company B's attorneys feel that this is a frivolous lawsuit and there is very little chance that the customer will win.
c.Company C co-signed a note payable for Company D.Company D is having serious financial problems and it is reasonably possible that Company C will have to pay the note.
d.Company E is being sued for a patent infringement.Company E's attorney feels that Company E will be found liable for damages caused by the patent infringement.However,the attorney states it is not possible to estimate the amount of the award.

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Definitions:

Corporate Officers

High-ranking executives appointed to manage an organization or corporation, such as CEOs, CFOs, and COOs, responsible for its day-to-day operations.

Employees

Individuals who are hired by a business or organization to perform work in exchange for compensation.

Duty to Reimburse

The obligation to pay back or compensate another party for expenses, losses, or damages incurred on one's behalf.

Authorized Expenditure

An approved expense deemed necessary and reasonable for the operation or management of a business or organization.