A company has been sued for damages as a result of illness caused to local residents due to the emission of highly toxic chemicals from its plant.The company's legal firm advises that it is probable that the company will lose the suit and that it probably will result in a judgment of $2 million to $10 million in damages.However,the legal firm believes that the most probable amount of the loss will be $6 million,and that the suit will be terminated about three years hence.The company has no other lawsuits pending.
(a)Should the company disclose this event in the year the suit was filed? (check one)_____ No; _____ Note only; _____ A loss in the income statement.
(b)If a loss should be reported,give the journal entry required:

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The Answer of A company has been sued for damages as a result of illness caused to local residents due to the emission of highly toxic chemicals from its plant.The company's legal firm advises that it is probable that the company will lose the suit and that it probably will result in a judgment of $2 million to $10 million in damages.However,the legal firm believes that the most probable amount of the loss will be $6 million,and that the suit will be terminated about three years hence.The company has no other lawsuits pending.
(a)Should the company disclose this event in the year the suit was filed? (check one)_____ No; _____ Note only; _____ A loss in the income statement.
(b)If a loss should be reported,give the journal entry required:

A Company Has Been Sued for Damages as a Result