Acustomer of roughedge sharpeners alleges that roughedge's new razor sharpener had a defect that resulted in serious injury to the customer. roughedge believes the customer has a 51% chance of winning the case, and that if the customer wins the case, there is a range of losses of between $1,000,000 and $3,000,000 in which any number is equally likely to occur. under u. s. gaap, roughedge should accrue a liability in the amount of: a. $0b. $1,000,000c. $2,000,000d. $3,000,000

The answer is C. $2,000,000.

Explanation:

Under U.S. GAAP, the contingent liabilities is accured when it meets the two criteria: The event is likely to happen ( that is, more than 50% of the chance that the liabilities will be assumed in the future) and it is possible to estimate the value of the liabilities.

Thus, liabilities in this case should be accrued ( so A. is eliminated).

The amount of accruals will be determined by the below calculation:

0.5 x (1,000,000 + 3,000,000) = $2,000,000; because it is given that any amount of loss is equally likely to occur in the given range from $1,000,000 to $3,000,000.

So, the answer is C. $2,000,000.

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of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.