Lan, an accounting major, and Pat, a marketing major, are watching a Matlock rerun on late-night TV. Of course, there is a murder and the suspect wants to hire Matlock as the defense attorney. Matlock will take the case but requires an advance payment of $150,000. Pat remarks that Matlock has earned a cool $150,000 without lifting a finger. Lan tells Pat that Matlock has not earned anything but has a $150,000 liability. Pat asks How can that be?
Required:
Assume you are Lan. Explain to Pat why Matlock has a liability and when Matlock would actually earn the $150,000.