Vaughn Manufacturing is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Vaughn's lawyer states that it is probable that Vaughn will lose the suit and be found liable for a judgment costing Vaughn anywhere from $1820000 to $8970000. However, the lawyer states that the most probable cost is $5370000. As a result of the above facts, Vaughn should accrue O a loss contingency of $5370000 but not disclose any additional contingency. O a loss contingency of $1820000 and disclose an additional contingency of up to $7150000. O no loss contingency but disclose a contingency of $1820000 to $8970000. O a loss contingency of $5370000 and disclose an additional contingency of up to $3600000.
Vaughn Manufacturing is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Vaughn's lawyer states that it is probable that Vaughn will lose the suit and be found liable for a judgment costing Vaughn anywhere from $1820000 to $8970000. However, the lawyer states that the most probable cost is $5370000. As a result of the above facts, Vaughn should accrue O a loss contingency of $5370000 but not disclose any additional contingency. O a loss contingency of $1820000 and disclose an additional contingency of up to $7150000. O no loss contingency but disclose a contingency of $1820000 to $8970000. O a loss contingency of $5370000 and disclose an additional contingency of up to $3600000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Vaughn Manufacturing is being sued for illness caused to local residents as a result of negligence on the company's part in permitting
the local residents to be exposed to highly toxic chemicals from its plant. Vaughn's lawyer states that it is probable that Vaughn will
lose the suit and be found liable for a judgment costing Vaughn anywhere from $1820000 to $8970000. However, the lawyer states
that the most probable cost is $5370000. As a result of the above facts, Vaughn should accrue
O a loss contingency of $5370000 but not disclose any additional contingency.
O a loss contingency of $1820000 and disclose an additional contingency of up to $7150000.
O no loss contingency but disclose a contingency of $1820000 to $8970000.
O a loss contingency of $5370000 and disclose an additional contingency of up to $3600000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F671de901-83b8-4f97-8655-0b1467b41a0f%2F0b7e0027-6cb5-41a6-a9bd-66c7c5a25412%2Fpkzckce_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Vaughn Manufacturing is being sued for illness caused to local residents as a result of negligence on the company's part in permitting
the local residents to be exposed to highly toxic chemicals from its plant. Vaughn's lawyer states that it is probable that Vaughn will
lose the suit and be found liable for a judgment costing Vaughn anywhere from $1820000 to $8970000. However, the lawyer states
that the most probable cost is $5370000. As a result of the above facts, Vaughn should accrue
O a loss contingency of $5370000 but not disclose any additional contingency.
O a loss contingency of $1820000 and disclose an additional contingency of up to $7150000.
O no loss contingency but disclose a contingency of $1820000 to $8970000.
O a loss contingency of $5370000 and disclose an additional contingency of up to $3600000.
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