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What Is the Amount of the Liability That the Company

question 115

Essay

What is the amount of the liability that the company recognizes in each of the following independent cases?
a. A cereal company issues coupons that can be exchanged for boxes of cereal.It issues 1 million coupons that promise the retailer who redeems the coupons $1 per coupon.The probability of redemption of any one coupon is 8%.
b. A plaintiff files a lawsuit against the company.The probability is 80% that the company will lose.If it loses, the amount of the loss will most likely be $100,000.


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