A customer got serious food poisoning from Tasty Feast restaurant on March 30, 20x2, necessitating a trip to the emergency room.
On April 5, 20x2, the customer initiated a lawsuit. At December 31, 20x2, Tasty Feast estimated its probable loss to be $50,000.
In January, 20x3, before issuance of Tasty Feast's financial statements, a judge ruled in favor of the customer and awarded the customer $80,000 in damages.
Must the company recognize the effects of this ruling in its 20x2 financial statements? Explain.
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