Question

Dexter Tours is a defendant in litigation involving an accident that occurred during a cruise. The company is sued for $5 million in damages. The likelihood of a payment occurring is probable, and the amount is estimated to be $3 million. What the company required to do in this scenario?

Answer 1

Answer The company should disclose a contingent liability of $3m

Step-by-step explanation:

A contingent liability arises from past events but it's occurrence depends on

existence or non existence of future events beyond the firm's control

Snce it's only probably that the case will be awarded against the company they are to disclose the estimated amount of $3m dollar as contingent liability