Buchanan Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Buchanan will lose the case and that a reasonable estimate of damages to be paid by Buchanan is $300,000. In light of this case, Buchanan is considering establishing a $100,000 self-insurance allowance. What entry(ies), if any, should Buchanan record to recognize this loss contingency

Debit: Litigation expense $300,000

Credit: Litigation liability $300,000

Explanation:

Loss contingency is typically a charge to expense for a future occurence in this case, a lawsuit. A loss contingency simply makes the economic entity to be aware at an early stage of the loss and its likely financial implication.

The entries that Buchanan should record to recognize this loss contingency will be to:

Debit: Litigation expense $300,000

Credit: Litigation liability $300,000

answer a is correct answer

a progressive tax is a tax that imposes a lower tax rate on low-income earners compared to those with a higher income, making it based on the taxpayer's ability to pay. that means it takes a bigger percentage from high income earners than it does from low income people.