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How should m-m account for the second lawsuit

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Question - During the current year M&M was involved in two lawsuits. In the first lawsuit, M&M was sued by two employees who claimed that they were injured by potential defective containers that came apart during loading. The company attorney determined that there is a high probability that the jury will grant punitive damages of $1,000,000.

In the second lawsuit, M&M sued a vendor for failure to comply with design specifications which resulted in the faulty containers that caused the injuries to the employees. M&M is suing for $2,500,000 in damages to cover the payment for the first lawsuit and damage to the company's reputation. The attorney is confident that the company will be successful.

1) How should M&M account for the first lawsuit?

2) How should M&M account for the second lawsuit?

Reference no: EM132092328

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