On Nov. 25, 2017, an explosion occurred at Stefan company causing extensive property damage to area buildings. By March 10, 2018, claims had been asserted against the entity. The management and counsel concluded that it is probable that the entity would be responsible for damages, and that 3,500,000 is a reasonable estimate of the liability. Stefan’s 10,000,000 comprehensive public policy has a 500,000 deductible clause. The financial statements were issued on March 31, 2018. What amount of liability from lawsuit should be reported on December 31, 2017?

On Nov. 25, 2017, an explosion occurred at Stefan company causing extensive property damage to area buildings. By March 10, 2018, claims had been asserted against the entity. The management and counsel concluded that it is probable that the entity would be responsible for damages, and that 3,500,000 is a reasonable estimate of the liability. Stefan’s 10,000,000 comprehensive public policy has a 500,000 deductible clause. The financial statements were issued on March 31, 2018. What amount of liability from lawsuit should be reported on December 31, 2017?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter12: Corporations: Organization, Capital Structure, And Operating Rules

Section: Chapter Questions

Problem 43P

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