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    Centel Corporation: disclosure in annual report. Is it a liability?

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    The following appeared in Centel Corporation's annual report:

    "In December, an investor in the Argo group Inc (TAGI) filed suit against a subsidiary of the company for damages from alleged breach of fiduciary duty and negligence related to the bankruptcy of a subsidiary of TAGI. The company cannot predict the ultimate outcome of this action but believes it will not have a material effect on the company's financial position."

    Is this a liability? How should it be reported? Why?

    © BrainMass Inc. brainmass.com June 3, 2020, 5:42 pm ad1c9bdddf

    Solution Preview

    Yes this is a contingent liability because there is a breach of legal obligation. It should be ...

    Solution Summary

    In a short paragraph, the response explains the disclosure and the impact to the company.