On January 17, 2011, an Explosion Occurred at an Orioles

question 31

Multiple Choice

On January 17, 2011, an explosion occurred at an Orioles Fireworks plant causing extensive property damage to area buildings. Although no claims had yet been asserted against Orioles by March 10, 2011, Orioles' management and counsel concluded that it is reasonably possible Orioles will be responsible for damages and that $2,500,000 would be a reasonable estimate of its liability. Orioles' $10,000,000 comprehensive public liability policy has a $500,000 deductible clause. In Orioles' December 31, 2011, financial statements, which were issued on March 25, 2012, how should this item be reported?

• A) As a footnote disclosure indicating the possible loss of $500,000
• B) As an accrued liability of $500,000
• C) As a footnote disclosure indicating the possible loss of $2,500,000
• D) As an accrued liability of $2,500,000

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Definitions:

ADHD

Attention Deficit Hyperactivity Disorder, a neurodevelopmental disorder characterized by patterns of inattention, hyperactivity, and impulsivity.

Behavioral Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through reinforcement strategies.

Psychodynamic Therapy

A therapeutic approach aiming to explore the psychological forces underlying emotional issues, emphasizing unconscious processes and childhood experiences.

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The medical term for involuntary urination, typically referring to children who wet the bed at night beyond the toddler years.