The Impact of Litigation on Financial Statements (Course Id 2505)

• Who is this course for?
  This course is intended for anyone needing Continuing Professional Education (CPE), particularly CPAs and accounting professionals.

• What is this course about or what problem does this course solve?
  The course addresses the accounting and financial reporting obligations related to litigation, including how to evaluate, recognize, measure, and disclose litigation-related contingencies.

• How can the knowledge from this course be used?
  Participants can apply this knowledge to determine when to accrue litigation liabilities under ASC 450-20 and accurately disclose them in financial statements.

• Why is this course important to a CPA, Accountant, or IRS Enrolled Agent?
  This course helps professionals ensure compliance with U.S. GAAP standards regarding legal contingencies, which is critical for accurate and transparent financial reporting.

• When is this course relevant or timely?
  The course is especially relevant in any reporting period where companies face actual or potential litigation, as it was recently released in 2025 and includes up-to-date guidance.

• How is a course like this consumed or used?
  This is a self-study, text-based course available online, completed at the participant’s own pace with review questions and a final exam.

This course offers an overview of the accounting and financial reporting obligations related to litigation. It covers the classification of litigation outcomes as probable, reasonably possible, or remote, along with guidance on evaluating, recognizing, measuring, and disclosing litigation-related contingencies. 

NASBA QAS - Text - NASBA Registry - 2505

Course Learning Objectives

• Identify when to accrue a liability for litigation-related contingencies under ASC 450-20
• Differentiate between probable, reasonably possible, and remote litigation outcomes
• Recognize the role of legal counsel in the litigation process
• Identify the appropriate financial statement disclosures for litigation-related contingencies

Chapter 1 - The Impact of Litigation on Financial Statements

Course Learning Objectives

Course Overview

Introduction

Types of Legal Disputes

Why Accurate Evaluation Matters

Relevant U.S. GAAP Standards

Probability of Litigation Outcomes

Evaluating the Probability of Litigation Outcomes

Review Questions

Function of Legal Counsel

Asserted vs. Unasserted Claims

Recognition and Measurement of Legal Contingencies

Gain Contingencies

Financial Statement Disclosures

Conclusion

Review Questions

Glossary of Key Terms