Reference no: EM132568407

Question - The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's ?scal year ends on December 31. Financial statements are issued in March 2022. Erismus prepares its ?nancial statements according to US. GAAP.

Required - Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances.

1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, thejudgment will be $1,510,000.

2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,750,000 to $5,500,000, with any damage in that range equally likely.

3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages will eventually be $5,950,000, with a present value of $4,165,000.

4. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, thejudgment will be $1,510,000.

5. Erismus is a plaintiff in a lawsuit. Erismus's management believes it is virtually certain that the company eventually will prevail in court, and that if it prevails, thejudgment will be $546,000.