Buzz Coffee Shops is famous for its large servings of hot coffee. After a famous case involving McDonald's, the lawyer for Buzz warned management (during 2009) that it could be sued if someone were to spill hot coffee and be burned. "With the temperature of your coffee, I can guarantee it's just a matter of time before you're sued for $1,000,000." Buzz felt the likelihood was remote. Unfortunately, in 2010, the lawyer's prediction came true when a customer filed suit. After consulting with his attorney, Buzz felt the loss was possible but not likely or probable. The case went to trial in 2011, and the jury awarded the customer $400,000 in damages, which the company immediately appealed. Buzz felt a loss was probable but believed a lower amount could be negotiated. During 2012, the customer and the company settled their dispute for $150,000.
Required:
State which of the following statement(s) are true. (Select all that apply.)
a.Buzz must disclose the liability in a note because the trial judgment makes the likelihood of a liability possible. The opportunity to overturn this ruling on appeal means that the liability isn't yet probable in 2011.
b.Buzz does not have to record or disclose the liability because the chance of the liability occurring is remote in 2009.
c.In 2012, Buzz must now record the loss and the liability because the out of court settlement made the $150,000 loss certain.
d.Buzz must disclose in a note that a potential liability exists because the liability is possible in 2010.
e.Buzz have to record or disclose the liability because the chance of the liability occurring is remote in 2009.
f.Buzz must disclose the liability because the chance of the liability occurring is remote in 2010.