Buzz Coffee Shops is famous (or its large servings of hot coffee. After a famous
ID: 2489504 • Letter: B
Question
Buzz Coffee Shops is famous (or its large servings of hot coffee. After a famous case involving McDonald's. the lawyer for Buzz warned management (during 2011) that it could be sued if someone were to spill hot coffee and be burnod. '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 2013, 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 2014, 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 2015, the customer and the company settled their dispute for S 150,000. State which of the following statement(s) are true. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Buzz must disclose in a note that a potential liability exists because the liability is possible. Buzz must disclose the liability in a note because the trial judgment makes the likelihood of a liability probable, however the amount of the loss still is not estimable (because a lower amount is expected to be negotiated). Buzz must now record the loss and the liability because the out of court settlement made the $150,000 loss certain. Buzz must disclose in a note that a potential liability exists because the liability is possible in 2013. Buzz must record or disclose the liability because the chance of the liability occurring is remote in 2014 Buzz must disclose the liability because the chance of the liability occurring is remote in 2015.Explanation / Answer
Option 4,5,6,2 shall be done in order. because when case went into court and it provide remedy to customer at that time possibilty arises of loss so it should be recorded accordingly.
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