Marx Company becomes aware of a lawsuit after the date of the financial statements, but before they are issued. A loss and related liability should be reported in the financial statements if the amount can be reasonably estimated, an unfavorable outcome is highly probable, and

Question

Quizplus · Accepted Answer

The loss and liability should be reported if the cause for action occurred during the accounting period covered by the financial statements, as it relates to events that existed at the balance sheet date.

Marx Company Becomes Aware of a Lawsuit After the Date