My Professor has asked for facts, issues, and reccommeded accountinng from this

Question

My Professor has asked for facts, issues, and reccommeded accountinng from this case. I know the first and the last one, but I can't find any issues in this case, and could use some help.

Case 13-08 Accounting for a Loss Contingency for a Verdict Overturned on Appeal M Internatial"M) and W Inc. ("W," a competitor of M) have been engaged in long standing litigation over a specific patent i timeline of specific events that have taken place related to this matter: nfringement matter. Below is a su mmary In May 2007, W filed a claim against M for patent infringement. For the year ended December 31, 2007, management of M determined that a loss for this matter was probable and represented that the estimate of loss was in the range of $15 million to $20 million, with S17 million being the most likely amount of loss within the range. A jury trial took place in September 2009 · The jury reached a verdict on September 24, 2009, and a judgment was ordered in favor of W. The judgment required M to pay W $18.5 million. . In November 2009, M filed a Notice of Appeal with the Court of Appeals. In December 2010, the Court of Appeals issued a ruling in favor of M's appeal and reversed the lower court's ruling on the matter. This meant that the Court of Appeals overturned the jury verdict and the $18.5 million judgment against M On January 6, 2011, W filed a petition for a re-hearing before the same panel of appellate judges against the reversal of ruling by Court of Appeals. On February 10, 2011, the appellate judges declined the petition for a re-hearing. discussions with in-house legal counsel On February 28, 2011, management of M determined this matter was closed upon Required

Explanation / Answer

The issues related to this case are:

1. What amount of loss should M recognize in his book for the year ended 31 december, 2007.

An estimate loss from a loss contingency should be accrued against income if the amount of loss can be reasonably estimated and information is available before the date of financial statement the liability had been incured at the date of financial statement.

2. The amount of loss M should recognize in year 2009

The judgement required M to pay $18.5 millions to W. Even though he filed the Notice of appeal to Court of Appeals, he has to provide for loss contingency for amount which is most probable, The amount of $18.5 is not fixed as the appeal is still pending, M has to provide for it.

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