The following note accompanied the financial statements for Goodyear Tire and Rubber Company (GT):
We are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from alleged exposure to certain asbestos products manufactured by us or present in certain of our facilities. Typically, these lawsuits have been brought against multiple defendants in state and federal courts. To date, we have disposed of approximately 109,500 claims by defending and obtaining the dismissal thereof or by entering into a settlement. The sum of our accrued asbestos-related liability, . . . including legal costs totaled approximately $458 million . . .
a. Illustrate the effects on the accounts and financial statements of recording the contingent liability of $458,000,000.
b. Why was the contingent liability recorded?