E$12\mathrm{.}13($LO $3)($Contingencies$)$ Presented below are three independent situations. Answer the question at the end of each situation.

During $2025,$ Salt$-$n$-$Pepa Inc. became involved in a tax dispute with the IRS. Salt$-$n$-$Pepa's attorneys have indicated that they believe it is probable that Salt$-$n$-$Pepa will lose this dispute. They also believe that Salt$-$n$-$Pepa will have to pay the IRS between $$900,000$ and $$1,400,000.$ After the $2025$ financial statements were issued, the case was settled with the IRS for $$1,200,000.$ What amount, if any, should be reported as a liability for this contingency as of December $31,2025?$

On October $1,2025,$ Jackson Chemifal was identified as a potentially responsible party by the Environmental Protection Agency. Jackson's management along with its counsel have concluded that it is probable that Jackson will be responsible for damages, and a reasonable estimate of these damages is $$5,000,000.$ Jackson's insurance policy of $$9,000,000$ has a deductible clause of $$500,000.$ How should Jackson Chemical report this information in its financial statements at December $31,2025?$

Etheridge Inc. had a manufacturing plant in Sudan, which was destroyed in the civil war. It is not certain who will compensate Etheridge for this destruction, but Etheridge has been assured by governmental officials that it will receive a definite amount for this plant. The amount of the compensation will be less than the fair value of the plant, but more than its book value. How should the contingency be reported in the financial statements of Etheridge Inc.?