Exwella Pharmaceuticals Inc is involved in various

lawsuits regarding product #3150

Exwella Pharmaceuticals, Inc. is involved in various lawsuits regarding product liability,
commercial liability, and other matters that arise from time to time in the ordinary course of
business. The lawsuits pending at the beginning of the year and those filed in the current years
are detailed below. Pending Lawsuits at the Beginning of the Year. 1. Product liability lawsuit
related to Nowaya, a pharmaceutical drug, in which claimants seek substantial damages.
Exwella’s attorneys assess the likelihood of losing the lawsuit as reasonably possible at 60%.
At the beginning of the year, the estimated loss ranged from $ 500,000 to $ 1,500,000. At the
end of the year, the attorney’s assessment of the loss increased to a range between $ 750,000
and $ 2,000,000. 2. A personal injury lawsuit in which a claimant seeks substantial damages.
Exwella’s attorneys assess the likelihood of losing the lawsuit as probable at 95%. At the
beginning of the year, Exwella reported a contingent liability of $ 750,000 for the lawsuit. At the
end of the year, the attorney’s assessment of the loss increased to a range between $ 900,000
and $ 3,000,000. NewPending Lawsuits. 3. A new product liability lawsuit was filed related to
the drug Dontacit. Exwella’s attorneys assess the likelihood of losing the lawsuit as remote at
10%. The attorney’s assessment of the loss increased to a range between $ 10,000,000 and $
15,000,000. 4. A new product liability lawsuit was filed related to the drug Noapproval.
Exwella’s attorneys assess the likelihood of losing the lawsuit as probable. The attorney’s
assessment of the loss increased to a range between $ 2,000,000 and $ 4,000,000. Required a.
Explain how each of the lawsuits is accounted for under U. S. GAAP. b. Prepare any journal
entries required at the end of the year.View Solution:
Exwella Pharmaceuticals Inc is involved in various lawsuits regarding product

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