Question - On February 10, 2016. the CFO of your client, the ABC manufacturing company, a public company, informs you that earlier day the jury in a wrongful death suit had found ABC guilty and awarded the plaintiff damages of 10,000,000. The CFO also informs you that the company does not intend to appeal and that in 2013 it had accrued 18,000,000 for potential damages and estimated legal expenses (the legal expenses are now expected to total 3,000,000). You anticipate completing your audit of the Dec 31 2015 financial statements on Feb 14, 2016.
Questions:
Describe the financial statement effects, if any, of the preceding situation.
Prepare any necessary adjusting journal entries.