How should skillsoft have treated the settlement

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Reference no: EM13994209

SkillSoft is a leading provider of content resources and complementary technologies for integrated enterprise learning. The company's fiscal year ends January 31, 2006, and it plans to file its financial statements with the SEC on April, 17, 2006. On April 13, the company issued the following press release (in part):
NASHUA, N.H., April 13 /PRNewswire-FirstCall/-SkillSoft PLC (Nasdaq: SKIL), . has agreed . to settle a lawsuit filed against it and certain of its former and current officers and directors in late 2004 related to the 2002 securities class action lawsuit. This lawsuit included substantially the same claims as those set forth in the previously settled 2002 securities class action lawsuit. Under the terms of the settlement, SkillSoft will pay a total of $1.79 million to the plaintiffs prior to April 17, 2006.

Required:

1. From an accounting perspective, how should SkillSoft have treated the settlement?

2. Relying on the information provided by the press release, re-create the journal entry SkillSoft recorded for the settlement.

3. Suppose the settlement had occurred after April 17. How should SkillSoft have treated the settlement?

Reference no: EM13994209

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