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Assume that Picnic Paper Co. has several minor lawsuits outstanding. To determine the amount of liability...


Assume that Picnic Paper Co. has several minor lawsuits outstanding. To determine the amount of liability to recognize on the
Assume that Picnic Paper Co. has several minor lawsuits outstanding. To determine the amount of liability to recognize on the statement of financial position, Picnic decides to use expected cash flow techniques. Based on discussions with their lawyers, Picnic has developed the following cash flow estimates, and related probabilities: YearCash Flow EstimateProbability Assessment 2020$2,30030% $4,50045% $8,20025% 2021$3,20020% $5,40050% $7,10030% Instructions Based on these estimates, and assuming a risk-free rate of 5%, what is the present value of expected cash flows that Picnic should record on their statement of financial position for 2020? When should the accrual cashflows be recognized in the books?
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