Why company does not have to record contingent liabilities

Reference no: EM131830834

Question: A large retailer was sued nearly 5,000 times in a recent year-about once every 2 hours every day of the year. It has been sued for everything imaginable-ranging from falls on icy parking lots to injuries sustained in shoppers' stampedes to a murder with a rifle purchased at one of its stores. The company reported the following in the notes to its financial statements:

Instructions: (a) Explain why the company does not have to record these contingent liabilities.

(b) Comment on any implications for analysis of the financial statements.

Reference no: EM131830834

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