Question

Your company was recently served with a lawsuit. The outcome of the litigation will not be determined for several months, but it could result in a materially large settlement to be paid by your corporation According to GAAP, what action should you take? SELECT ONLY ONE Take no action, because it may be dismissed Provide a disclosure on financial statements regarding the pending litigation Wait for the outcome of the lawsuit to address stakeholders Ensure information regarding the lawsuit is not revealed Provide a statement to employees and stockholders

Answer 1

Answer:

According to GAAP,Provide a disclosure on financial statements regarding the pending litigation

Explanation:

According to GAAP, Provide a disclosure on financial statements regarding the pending litigation.

A statement disclosure will communicate relevant information not captured in the statement itself  to a company's stakeholders.

According  to GAAP the financial statements must have disclosure notes.

the other choices are incorrect as they do not provide any defense or protective measure against the case filed.