Skypt Co.is involved in a lawsuit and sued by Quart Co.for $500,000.Skypt feels it is probable that it will lose the lawsuit.What should Skypt Co.and Quart Co.record or disclose concerning the lawsuit?
A) Skypt Co.should record a $500,000 contingent liability; Quart Co.should record a $500,000 contingent gain.
B) Skypt Co.should record a $500,000 contingent liability; Quart Co.should not record or disclose a contingent gain.
C) Skypt Co.should disclose a $500,000 contingent liability; Quart Co.should disclose a $500,000 contingent gain.
D) Skypt Co.should not record or disclose a contingent liability; Quart Co.should record a $500,000 contingent gain.
Correct Answer:
Verified
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