Asbestos Corp

Multiple Choice

Asbestos Corp.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. Asbestos's lawyer states that it is likely the corporation will lose the suit and be found liable for a judgement which may cost Asbestos anywhere from $300,000 to $1,500,000.However, the lawyer states that the most likely cost is $900,000.As a result of the above facts, using ASPE, Non-Financial and Current Liabilities 13- 21 Asbestos should accrue

A) a loss contingency of $300,000 and disclose an additional contingency of up to
$1,200,000.
B) a loss contingency of $900,000 and disclose an additional contingency of up to
$600,000.
C) a loss contingency of $900,000 but not disclose any additional contingency.
D) no loss contingency but disclose a contingency of $300,000 to $1,500,000.