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What amount should lorange recognize as a liability

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Reference no: EM132916452

Problem - Lorange AG became involved in a lawsuit with a government agency. The company's legal counsel indicates that there is a 65 percent likelihood that the company will lose this dispute and estimates that the amount the company will have to pay is between $ 500,000 and $ 700,000, with all amounts in that range being equally likely.

Under U.S. GAAP, what amount, if any, should Lorange recognize as a liability related to this lawsuit?

A. $700,000.

B. $600,000.

C. $500,000

D. $0.

Reference no: EM132916452

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