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Contingent liability is an accrual for possible losses

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Brite Corp. had the following liabilities at December 31, year 2:

Accounts payable $55,000 Unsecured notes, 8%, due 7/1/Y3 400,000 Accrued expenses 35,000 Contingent liability 450,000 Deferred income tax liability 25,000 Senior bonds, 7%, due 3/31/Y3 1,000,000 The contingent liability is an accrual for possible losses on a $1,000,000 lawsuit filed against Brite. Brite's legal counsel expects the suit to be settled in year 4, and has estimated that Brite will be liable for damages in the range of $450,000 to $750,000.

The deferred income tax liability is not related to an asset for financial reporting and is expected to reverse in year 4.

What amount should Brite report in its December 31, year 2 balance sheet for current liabilities?

Reference no: EM131802937

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