NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 (in Part): Commitments and Contingencies The Company self-insures its product lability losses in the United States up to $3.8 milion (catastrophic coverape is maintained for indvidual claims in axcess. of $3.8 milion up to $26.3 million). Outside the United States, the Compamy is insured for product liabilty up to $26.3 malilon per indlvidual claim and in the aggregate. Read the regurements. 1. Why are these contingent (wersus roa) liablities? These are contingent labilales because at the time of the note Martinson Cycles, inc. fiate for any of these product losses. Requirements 1. Why are these contingent (versus real) liabilities? 2. In the United States, how can the contingent liability become a real liability for Martinson? What are the limits to the company's product liabilities in the United States? 3. How can a contingency outside the United States become alreal liability for the company? How does Martinson's potential liability differ for claims outside the United States