Your client is being sued. You have asked the client’s lawyer about the possibility of losing the lawsuit. The client, meanwhile, has asked you to describe what would happen to his or her financial statements. The client has also informed you that by losing the lawsuit, he or she anticipates losing the mortgage and has started talking to a mortgage lender. The client wants to know if part of the debt is forgiven, or if the mortgage is rewritten, or if the mortgage will be rewritten if he or she files Chapter 11.
The lawsuit also involves a patent held by the company. The company had acquired a hedge contract against the impairment of the patent. Aside from the recovery of the hedge, the client wants to know how the impairment of the patent will be reflected on the financial statements in the event of losing a lawsuit.
Conduct research in FASB individually to answer your client’s questions.
Write a 700- to 1,050-word memo as a team that is brief but fully explores the issues. Include the following in your memo:
·Report requirements for contingencies and describe what would happen to the financial statements if the client loses the lawsuit.
·Describe whether the client’s debt is forgiven if the mortgage is rewritten, or if their mortgage will be written if they file Chapter 11. How will the reporting on the financial statement be determined?
·Describe how the impairment of the patent will be reflected on the financial statements in the event of losing a lawsuit.
Format your paper consistent with APA guidelines, including appropriate citations and references
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