The Pine Corp. learns in July 2018 some new information about a lawsuit that first started in 2015. Pine Corp. had shown a liability of $2,000,000 related to this lawsuit in its December 31 balance sheets for 2015, 2016, and 2017. It now believes the liability will be only $1,500,000. Under GAAP, Pine Corp. should
A) Restate the 2015, 2016, and 2017 statements to show a $1.5 million liability
B) Restate only the 2017 statements to show a $1.5 million liability
C) Not restate any prior year's liability, but reflect a benefit of $500,000 in the 2018 financial statements and disclose the change in estimate
D) Not restate any prior year's liability, but reflect a benefit of $500,000 in the 2018 financial statements. It should not disclose the change in estimate
Correct Answer:
Verified
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