A Customer of Razor Sharpeners Alleges That Razor's New Razor

question 52

Multiple Choice

A customer of Razor Sharpeners alleges that Razor's new razor sharpener had a defect that resulted in serious injury to the customer. Razor believes the customer has a 51% chance of winning the case, and that if the customer wins the case, there is a range of losses of between $1,000,000 and $3,000,000 in which any number is equally likely to occur. Under IFRS, Razor should accrue a liability in the amount of:

• A) $0.
• B) $1,000,000.
• C) $2,000,000.
• D) $3,000,000.

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Definitions:

Sensory Adaptation

A phenomenon of the sensory system in which sensitivity to a constant stimulus decreases over time.

Progressive Desensitization

A therapeutic method gradually exposing individuals to the things they fear in a controlled way to decrease their sensitivity.

Pragnanz

A principle from Gestalt psychology that suggests people will perceive and interpret ambiguous or complex images as the simplest form(s) possible.

False Alarm

An instance where a warning or signal is given for a danger or issue that does not actually exist.