ACC 541 Week 4 Individual Assignment Response to Client Request II

This memo elaborates on the Financial Accounting Standards Board’s (FASB) Codification 450-10-05-4 that details how loss and gain contingencies will be reported and the standards for the financial statements.  According to FASB stipulations financial statements, mortgage, and patent are affected when someone loses a case.   This memo will provide the information needed to answer many of the questions concerning the upcoming lawsuit. 

 

The general rule (paragraph 450-20-25-1 of the loss contingencies) applies when a loss contingency is present, and the probability that an expected incident or event would validate the loss, the incurrence of a liability, or damage of an asset can vary from probable to remote (FASB, 1975, p. 442).  The word loss or losses is used as a way to encompass charges against income (also referred to as expenses).  The FASB paragraph 450-20-25-2 states that an approximate loss from a loss contingency reflects a charge to income.  However, the two conditions below must be met:
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