Booking a lawsuit as an asset

Question

Apr 24, 2007, 07:39 PM

cuinheaven

New Member

Join Date: Apr 2007

Posts: 2

Booking a lawsuit as an asset

How would you recommend booking the value of a lawsuit (asset & liability) on a financial statement?

Answers

Apr 24, 2007, 09:44 PM	#2

CaptainForest

Finance & Accounting Expert

Join Date: Nov 2005

Location: Canada

Posts: 3,672

GAAP says that for all contingent liabilities (and that includes law suits)…

If you are likely to win the law suit, you do not record anything nor do you even need to report it.

If you are likely to lose and can measure the loss, you should accrue it. If you can’t measure the loss, then you make a note in the financial statements.

If you can not determine whether you will win or lose, you will make a note in the financial statements (regardless if you can measure it).

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