During 20X1, Violet, Inc. and one of its suppliers became involved in a legal dispute....
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Accounting
During 20X1, Violet, Inc. and one of its suppliers became involved in a legal dispute. By the end of 20X1, Violet's attorney's advised Violet that an unfavorable outcome was probable. Further, Violet accountants estimated damages to be as low as $200,000 and as high as $300,000. Violet's insurance policy limits the company's exposure to $50,000 in losses. How much should Violet, Inc. report on its December 20X1 Balance Sheet as a contingent liability?
The answer to this question is not $200,000. I don't know how insurance plays into this?
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