Gore Inc. recorded a liability in 2021 for probable litigation losses of $2 million. Ultimately, $5 million in legitimate warranty claims were filed by Gore's customers. Multiple Choice Gore has made a change in accounting principle, requiring retrospective adjustment. Gore needs to correct an accounting error. Gore is required to adjust a change in accounting estimate prospectively. Gore is not required to make any accounting adjustments.

Question

Fisher Payne

Business

8 November, 14:57

Gore Inc. recorded a liability in 2021 for probable litigation losses of $2 million. Ultimately, $5 million in legitimate warranty claims were filed by Gore's customers. Multiple Choice Gore has made a change in accounting principle, requiring retrospective adjustment. Gore needs to correct an accounting error. Gore is required to adjust a change in accounting estimate prospectively. Gore is not required to make any accounting adjustments.

+2

Answers (1)

Know the Answer?

Dayami Hoffman · Answer 1

Gore is not required to make any accounting adjustments

Explanation:

Gore won't be required to make any accounting adjustments because the litigation loss is already $2,000,000 leading to him recording a liability in his account in which

$5 million in legitimate warranty claims were as well filed by his customers which is why he won't be making any further Accounting adjustment in 2021.