You are auditing Rodgers and Company. You are aware of a potential loss due to noncompliance with environmental regulations. Management has assessed that there is a 40% chance that a $10M payment could result from the non-compliance
The appropriate financial statement treatment is to
A) accrue a $4 million liability.
B) disclose a liability and provide a range of outcomes.
C) since there is less than a 50% chance of occurrence, ignore.
D) since there is greater that a remote chance of occurrence, accrue the $10 million.
Answer: B) disclose a liability and provide a range of outcomes.
You might also like to view...
According to the text, a ________ provides a series of pictures, which track the changes that take place over time
A) cross-sectional design B) longitudinal design C) horizontal design D) vertical design E) photographic design
Maria was injured when the brakes on her car failed so she sued the automobile manufacturer. After the pleadings the next step would be
A) a pretrial conference B) an examination for discovery C) alternative dispute resolution D) discovery of documents E) a debtor's examination