Unified Airlines is being sued by Northeast Airlines for $5,000,000. At the end of the year, Unified feels it is reasonably possible that it will pay $5,000,000 at some point in the following year. What should Unified and Northeast record at the end of the year concerning the lawsuit?
A) Unified does not record any loss Northeast records a $5,000,000 gain.
B) Neither company records a loss or gain.
C) Unified records a $5,000,000 loss Northeast records a $5,000,000 gain.
D) Unified records a $5,000,000 loss Northeast does not record any gain.
Answer: B
Unified Airlines is being sued by Northeast Airlines for $5,000,000. At the end of the year, Unified feels it is probable that it will pay $5,000,000 at some point in the following year. What should Unified and Northeast record at the end of the year concerning the lawsuit?
A) Unified does not record any loss Northeast records a $5,000,000 gain.
B) Unified records a $5,000,000 loss Northeast does not record any gain.
C) Unified records a $5,000,000 loss Northeast records a $5,000,000 gain.
D) Neither company records a loss or gain.
Answer: B
