A customer of RoughEdge Sharpeners alleges that RoughEdge's new razor sharpener had a defect that resulted in serious injury to the customer. RoughEdge believes the customer has a 51% chance of winning the case, and that if the customer wins the case, there is a range of losses of between $1,000,000 and $3,000,000 in which any number is equally likely to occur. Under U.S. GAAP, RoughEdge should accrue a liability in the amount of:
A) $0.
B) $1,000,000.
C) $2,000,000.
D) $3,000,000.

Question

Quizplus · Accepted Answer

51% probability is less than the typical interpretation of "probable."

A Customer of RoughEdge Sharpeners Alleges That RoughEdge's New Razor