Case 13-14 - Litigation Expense 1,790,000 Litigation...

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Daniel McAdams Accounting 302 Case 13-14 Requirement 1: The claims of the lawsuit filed in 2004 where “substantially the same” as the lawsuit they had settled in 2002. With this information SkillSoft, unfortunately, would be able to foresee that the probable outcome of the lawsuit to be unfavorable but at the current time they would be unable to estimate liabilities. The 1/31/05 financial statements would only require a disclosure note stating details of the lawsuit and that liabilities cannot be estimated. Under FASB 450-25-25-6 they would meet the criteria for the loss contingency to be accrued in 1/31/06 statements and also under FASB 450- 25-50-1 a -disclosure note must be added to the financial statements so that they may not be misleading. 1 Requirement 2: Date Account Debit Credit 1/31/2006
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Unformatted text preview: Litigation Expense 1,790,000 Litigation Liability 1,790,000 Requirement 3: If the settlement were to have occurred after the issuance of the financial statements, under FASB 450-20-50-10, SkillSoft would only footnote the lawsuit in its 1/31/06 statements because the amount of the settlement was not able to be estimated 2 . They would accrue the liability on the date of the settlement and be included in the 1/31/07 financial statements. The statements for 1/31/07 should also -contain disclosure notes relating to the details of the settlement. 1 "Financial Accounting Standards Board." FASB . Web. 28 Jan. 2010. <http://asc.fasb.org/section&trid=2127173%26analyticsAssetName=subtopic_page_section%26nav_type=subtopic_page>. Article 450-20-25-6 2 Ibid. 1. Article 450-20-50-10...
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This note was uploaded on 02/24/2010 for the course ACCT 311 taught by Professor Seese during the Spring '10 term at Old Dominion.

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