Use the loss-contingency matrix

A complaint filed January 20 alleges that a December product failure caused damage. A different complaint concerns a January 10 failure. Both suits exist before issuance. Only one underlying condition existed at December 31.

First gate: condition date and scope

Write the event that allegedly impaired an asset or incurred a liability. If it occurred after year-end, the current-period recognition gate is not met under the general model, though disclosure can still matter. If another Topic owns the event, stop and route there.

Second gate: supplied probability conclusion

Under the US-GAAP lane, probable, reasonably possible, and remote are qualitative zones. The module supplies the conclusion after appropriate legal and management analysis. It never invents a universal 70 or 75 percent line. In practice, management owns the accounting conclusion and uses evidence that can include legal counsel's assessment; the learner and workbook do not compute the label.

Third gate: reasonable estimation

Recognition requires a supportable amount or range in addition to the probable incurred-loss conclusion. “Cannot estimate” does not mean “estimate is zero.” It means the entry is withheld while disclosure and continuing evidence work are evaluated.

Exit check

For three legal letters, mark the exact sentence supplying condition date, likelihood, and estimate. If any cell is missing, name who owns the follow-up and do not let a formula fill it.