Case 10-5 Danle Corporation Danle Corporation (Danle), a public company, conducts business activities primarily related to the design, development, manufacture, and assembly of passenger cars, recreational and sport-utility vehicles, minivans, and trucks. Danle used asbestos in the manufacturing of brake shoes and gaskets because of its heat resistance. During the past three years, two claims were filed against Danle by automotive mechanics and surviving family members seeking recovery because
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Case 10-5 Danle Corporation Danle Corporation (Danle), a public company, conducts business activities primarily related to the design, development, manufacture, and assembly of passenger cars, recreational and sport-utility vehicles, minivans, and trucks. Danle used asbestos in the manufacturing of brake shoes and gaskets because of its heat resistance. During the past three years, two claims were filed against Danle by automotive mechanics and surviving family members seeking recovery because of
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Danle Corporation – Case 10-5 Discuss whether you believe that the conclusion reached by Danle to omit disclosure regarding to the class-action litigation was appropriate for the year ended December 31, 2009. In our opinion, it was not appropriate for Danle Corporation to omit disclosure relating to the class action lawsuit for the year ended December 31, 2009. First, it must be noted that ASC 450-20-25-2 indicates the following: 25-2 An estimated loss from a loss contingency shall be
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Danle Corporation According to ASC 450-20-25, when a loss contingency exists, the likelihood includes three areas: probable, reasonably possible and remote. In ASC 275-10-50-8, the definition of the term reasonably possible means that the chance of a future transaction or event occurring is more than remote but less than likely. In the case, it is believed that Danle could potentially, but not probably be liable for a percentage of recovery in the claim, so we believe Danle’s loss contingency should
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