Skypt Co Is Involved in a Lawsuit and Sued by Quart

question 89

Multiple Choice

Skypt Co. is involved in a lawsuit and sued by Quart Co. for $500,000. Skypt feels it is probable that it will lose the lawsuit. What should Skypt Co. and Quart Co. record or disclose concerning the lawsuit?

• A) Skypt Co. should record a $500,000 contingent liability; Quart Co. should record a $500,000 contingent gain.
• B) Skypt Co. should record a $500,000 contingent liability; Quart Co. should not record or disclose a contingent gain.
• C) Skypt Co. should disclose a $500,000 contingent liability; Quart Co. should disclose a $500,000 contingent gain.
• D) Skypt Co. should not record or disclose a contingent liability; Quart Co. should record a $500,000 contingent gain.

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Definitions:

National Parks

Protected areas of natural or cultural significance, set aside by governments for conservation purposes and public enjoyment.

Land Mass

A large area of land distinct from other regions by boundaries or natural features, contributing to the geographical and ecological diversity of the planet.

Ecosystem Restoration

The process of assisting the recovery of an ecosystem that has been degraded, damaged, or destroyed, aiming to return it to its original state.

Artificial Ecosystems

Ecosystems that have been created or heavily modified by humans, including urban environments, agricultural land, and managed forests.