Accounting for Litigation and Legal Contingencies

Course Overview
This course provides an overview of the accounting and financial reporting requirements with respect to litigation.  This includes distinguishing between probable, reasonably possible, and remote litigation outcomes as well as how to evaluate, recognize, measure, and disclose litigation-related contingencies.  
Learning Objectives
Upon completion of this course, you will be able to:
•    Differentiate between probable, reasonably possible, and remote litigation outcomes
•    Identify when to accrue a liability for litigation-related contingencies under ASC 450-20
•    Recognize the role of legal counsel in the litigation process
•    Identify the appropriate financial statement disclosures for litigation-related contingencies

Introduction
Litigation is a common type of liability that many companies face, often as a normal part of doing business. Legal disputes can arise for various reasons, including disagreements over contracts, claims of faulty products, employee issues, intellectual property conflicts, and investigations by regulatory agencies. These legal matters can introduce financial uncertainty and risk for companies, which is why it is important to assess and account for them carefully. Accurate evaluation of litigation is important to ensure that company's financial statements are correct and consistent with accounting standards like ASC 450-20.
When it comes to legal claims, companies must determine how likely it is that they will face a loss and, if so, how much the loss could be. The likelihood of loss can be classified as probable, reasonably possible, or remote. Each of these outcomes requires different accounting treatments, which can affect what is reported in the financial statements. Properly accounting for these potential losses and disclosing them to investors helps provide a clear picture of the company's financial health.
 

Revision Date:  NEW 11/19/24

Additional Contents : Complete, no additional material needed
Advance Preparation : None
Intended Participants : Any CPA looking to maintain or enhance their professional competence
Course Declaration : Participants must complete the final examination within one year of purchase. A minimum passing grade of 70% or better is required to receive CPE
Click here to view cancellation and record retention policies