Unformatted text preview: d. TinyPart is defending against a fourth lawsuit and believes there is only a 25% chance it will lose in court. If TinyPart loses, it believes damages will fall somewhere in the range of $35,000 to $40,000, with each amount in that range equally likely to occur. 133. Indicate how TinyPart would disclose or account for the lawsuit described in part (a) under U.S. GAAP and under IFRS in the financial statements for the year ended December 31, 2013. Under U.S. GAAP TinyPart would make no accrual, as 51% would not be viewed as probable. Rather, TinyPart would provide note disclosure explaining the pending litigation and its estimates of potential damages. Under IFRS, TinyPart would recognize a loss and accrue a liability of $100,000, as 51% would be viewed as probable. AACSB: Analytic AACSB: Diversity AICPA BB: Global AICPA FN: Measurement Blooms: Analyze Difficulty: 2 Medium...
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- Winter '11
- Generally Accepted Accounting Principles, TinyPart