Fasb Results Client's Lawsuit
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- Date Submitted: 09/03/2012 10:44 AM
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FASB Results and Financial Impact of Client’s Lawsuit
ACC 541
July 23, 2012
Bethany Kessel
| |Accounting Firm |
Memo
|To: |Client |
|cc: |Client’s Lawyer and Accounting Director |
|Date: |July 23, 2012 |
|Re: |FASB Research Results-Lawsuit |
| | |
FASB Results and Financial Impact of Client’s Lawsuit
Whenever a client is subjected to a lawsuit it can be costly and it could damage the business reputation. In an effort to minimize risk and reduce potential loss to the company, the client sought advice from the firm. The client wants to know the contingencies requirements, financial statement impact, mortgage refinance, patent impairment, and Chapter 11 filing. In order to respond to the client’s questions, research was conducted and information was obtained from FASB. After the research is completed, a meeting will be held to inform the client of the results.
Contingences Reporting Requirements
If the client looses, the lawsuit is considered a contingent liability. A journal entry will be necessary to report all liabilities estimated amounts on the balance sheet. In addition, probable expenses must be reported on the income statement. However, if a contingent liability is possible, but not probable no journal entry is required. In this case, a disclosure in the notes to the financial statement must be presented that...
ACC 541
July 23, 2012
Bethany Kessel
| |Accounting Firm |
Memo
|To: |Client |
|cc: |Client’s Lawyer and Accounting Director |
|Date: |July 23, 2012 |
|Re: |FASB Research Results-Lawsuit |
| | |
FASB Results and Financial Impact of Client’s Lawsuit
Whenever a client is subjected to a lawsuit it can be costly and it could damage the business reputation. In an effort to minimize risk and reduce potential loss to the company, the client sought advice from the firm. The client wants to know the contingencies requirements, financial statement impact, mortgage refinance, patent impairment, and Chapter 11 filing. In order to respond to the client’s questions, research was conducted and information was obtained from FASB. After the research is completed, a meeting will be held to inform the client of the results.
Contingences Reporting Requirements
If the client looses, the lawsuit is considered a contingent liability. A journal entry will be necessary to report all liabilities estimated amounts on the balance sheet. In addition, probable expenses must be reported on the income statement. However, if a contingent liability is possible, but not probable no journal entry is required. In this case, a disclosure in the notes to the financial statement must be presented that...