Asbestos Corp

question 87

Multiple Choice

Asbestos Corp. is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals. Asbestos's lawyer states that it is likely the corporation will lose the suit and be found liable for a judgement which may cost Asbestos anywhere from $ 300,000 to $ 1,500,000. However, the lawyer states that the most likely cost is $ 900,000. As a result of the above facts, using ASPE, Asbestos should accrue

• A) a loss contingency of $ 300,000 and disclose an additional contingency of up to $ 1,200,000.
• B) a loss contingency of $ 900,000 and disclose an additional contingency of up to $ 600,000.
• C) a loss contingency of $ 900,000 but not disclose any additional contingency.
• D) no loss contingency but disclose a contingency of $ 300,000 to $ 1,500,000.

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Definitions:

Aflatoxin

A group of toxins produced by certain fungi, which are found on agricultural crops such as maize, peanuts, cottonseed, and nuts, and are highly carcinogenic.

Penicillin

A type of antibiotic derived from Penicillium fungi, effective against many bacterial infections by inhibiting cell wall synthesis.

Candida

Candida refers to a genus of fungi that includes several species, some of which can cause infections in humans, known as candidiasis, particularly in immunocompromised individuals.

Claviceps

A genus of fungi known for infecting grains and producing toxic alkaloids, notably causing ergotism when consumed by humans and animals.