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

Question

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Under ASPE, when a loss is likely and can be reasonably estimated, the most likely amount should be accrued. In this case, $900,000 is the most likely amount, and the range of $300,000 to $1,500,000 should be disclosed as an additional contingency.