Quayle Company Has Been Sued by a Customer Who Claims

question 100

Multiple Choice

Quayle Company has been sued by a customer who claims injury from use of Quayle's product. The company's lawyers and a consultant believe that the likelihood of a judgment against Quayle is remote. What should Quayle do to account for this potential liability?

• A) recognize the liability and report it on the balance sheet
• B) provide disclosure in the footnotes to the financial statements
• C) report an allowance account on the balance sheet
• D) do nothing

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