Adaptive Learning

$12\mathrm{.}3$ Contingencies

Anderson Petroleum is involved in a lawsuit over the removal of underground gasoline storage tanks at the former site of one of its filling stations. Anderson's attorneys believe it is probable the outcome of the suit will be unfavorable, but can only estimate the loss within the range of $$4$ million to $$8$ million, with the minimum of $$4$ million being the most probable outcome. How should Andersen record this environmental liability?

As a loss and liability of $$4$ million.

As a loss and liability of $$8$ million.

No recording is required.

As a loss and liability of $$6$ million.

$$