Wulai Company is facing the following situations and the

owner #616
Wulai Company is facing the following situations, and the owner of the company needs your
help in identify the accounting treatment:1. A customer sued Wulai for selling a defective
product. The time that the customer took to fix the defective product caused the customer's
company productivity loss, which was estimated around $30,000. Wulai claimed that the product
was not defective, but was misused by the customer. Wulai’s lawyer is confident that2. A
competitor sued Wulai for infringing their patent for one of Wulai's best-selling smart phones.
The court has awarded the plantiff $1 million. The owner of Wulai is appealing the case and
believes that the company will win the lawsuit, but the lawyers believe that it could lose the
appeal.RequirementsDetermine the appropriate accounting treatment. Based on your analysis,
identify whether the company should (1) recognize a provision, (2) disclose a provision liability,
or (3) determine no disclosure is required.View Solution:
Wulai Company is facing the following situations and the owner

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