Question

Patty's Bakery is a defendant in a lawsuit in which trademark Infringement is claimed. Patty's attorney believes there is very little chance that the company will lose in court and no settlement offer has been made. If Patty's does lose, the damages could be as high as the $50,000 of damages claimed in the lawsuit. How should this loss contingency impact the balance sheet that is currently being prepared? of 5 Multiple Choice Accrue a loss contingency in the amount of $50,000 Do not accrue a loss contingency or disclose the lawsuit is note Do not accrue a loss contingency, however, disclose the lawsuit in a note. < Prex 10 1 12 13of 13 Next MacBook Air

Answer 1

Do not accrue a loss contingency or disclose the lawsuit in a note.

As the chances of occurrence of liability are not probable, the liability should not be accrued or disclosed.

Option C is correct