Panama Shirt Designs is a defendant in litigation involving an employee accident in its manufacturing plant.
For each of the following scenarios, determine the appropriate way to report the situation. Explain your reasoning and record any necessary entry.
1. The likelihood of a loss occurring is probable and the estimated loss is $650,000.
2. The likelihood of a loss occurring is probable and the loss is estimated to be in the range of $500,000 to $800,000.
3. The likelihood of a loss occurring is reasonably possible and the estimated loss is $650,000.
4. The likelihood of a loss occurring is remote, while the estimated potential loss is $650,000.

Question

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The Answer of Panama Shirt Designs is a defendant in litigation involving an employee accident in its manufacturing plant.
For each of the following scenarios, determine the appropriate way to report the situation. Explain your reasoning and record any necessary entry.
1. The likelihood of a loss occurring is probable and the estimated loss is $650,000.
2. The likelihood of a loss occurring is probable and the loss is estimated to be in the range of $500,000 to $800,000.
3. The likelihood of a loss occurring is reasonably possible and the estimated loss is $650,000.
4. The likelihood of a loss occurring is remote, while the estimated potential loss is $650,000.

Panama Shirt Designs Is a Defendant in Litigation Involving an Employee