At December 31, 2015, Layla’s Design Company received legal
advice from an outside advisor that it was 75% probable that the
company would be found liable in a lawsuit related to fabric used
in a spring 2014 dress collection. A range of damages in the amount
of $250,000 to $300,000 was equally likely. Under U.S. GAAP, should
Layla’s Design Company recognize a provision for damages? If so,
please record the journal entry below.
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Description of the...