After building a profitable construction company together over several decades, Larry Stevenson and Jim Shapiro recognized that their differences had become irreconcilable. Stevenson wanted to buy

out Shapiro, who was willing to sell for the right price. After months of haggling and legal maneuvering,

Stevenson made his final offer: $8.5 million for Shapiro’s shares in the company.

The company is worth about $20 million, Shapiro thought to himself. I own 49% of the shares.

Heck, I helped build this company. I’m not going to accept anything less than my fair share—$10 million.

I’d rather fight in court than accept $8.5 million. Shapiro rejected the offer, and each party prepared for

a trial.

Shapiro’s rationale for rejecting Stevenson’s offer seemed reasonable enough. Furthermore,

Shapiro’s lawyers assured him, a court ruling very likely would be in his favor.

a) What do you think about Shapiro’s decision? Is it right or wrong? Why?

b) If you were Shapiro in this case, what would you asscess your BATNA?

The following selected circumstances relate to pending lawsuits for erismus, inc. erismus’s fiscal year ends on december 31. financial statements are issued in march 2019. erismus prepares its financial statements according to u.s. gaap. required: indicate the amount erismus would record as an asset, liability, or not accrued in the following circumstances. 1. erismus is defending against a lawsuit. erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,000,000. 2. erismus is defending against a lawsuit. erismus's management believes it is probable that the company will lose in court. if it loses, management believes that damages could fall anywhere in the range of $2,000,000 to $4,000,000, with any damage in that range equally likely. 3. erismus is defending against a lawsuit. erismus's management believes it is probable that the company will lose in court. if it loses, management believes that damages will eventually be $5,000,000, with a present value of $3,500,000. 4. erismus is a plaintiff in a lawsuit. erismus's management believes it is probable that the company eventually will prevail in court, and that if it prevails, the judgment will be $1,000,000. 5. erismus is a plaintiff in a lawsuit. erismus’s management believes it is virtually certain that the company eventually will prevail in court, and that if it prevails, the judgment will be $500,000.