Lawsuit payable definition
/What is a Lawsuit Payable?
A lawsuit payable is a general ledger account that contains the amount owed to the opposing party in a lawsuit. Liabilities are only recorded in this account if the amount to be paid is both probable and can be estimated.
Presentation of a Lawsuit Payable
The lawsuit payable account is usually classified as a current liability, since lawsuit payments are typically paid within one year. If this is not the case, then the account is instead classified as a long-term liability. The amount payable can be substantial; if so, it should be reported within a separate line item on the balance sheet, so that users of the financial statements can discern the reason for such a large liability. The presentation may be accompanied by a detailed description in the accompanying footnotes to the financial statements.