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kotykmax [81]
4 years ago
5

In the accounting records of a defendant, lawsuits:

Law
1 answer:
Natalka [10]4 years ago
8 0

Answer:

The correct answer is A: lawsuits should be recorded if payment for damages is probable and the amount can be reasonably estimated.

Explanation:

Legal claims or lawsuits against a defendant sometimes represent contingent liabilities because of the fact that the result/outcome of the dispute/controversy is unknown. As a result, considering the outcome of the lawsuit and supposing it may be unfavorable, the defendant should record the item (lawsuit) as a contingent liability on the balance sheet/accounting records. The accountant is to record a lawsuit as a liability provided the amount can be reasonably estimated and the payment for damages caused is highly probable.  

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