The Park Company Is Affected by the Following Contingencies at the End

question 35

Multiple Choice

The Park Company is affected by the following contingencies at the end of 2014: 1. Expropriation of Park's foreign assets, valued at $\$ 3,000,000$ , appears reasonably possible.
2. Parks' legal counsel has concluded that it is probable that the company will be required to pay damages of $\$ 500,000$ in a lawsuit.
3. It appears remotely possible that a major customer will be unable to repay Parks on a note receivable for $\$ 100,000$ .
4. Parks' controller estimates that $\$ 250,000$ of the company's pledged receivables are likely to be uncollectible, and the lender will require Parks to honor the amounts.

What total amount should Parks accrue for loss contingencies in 2014?

• A) $ 750,000
• B) $ 850,000
• C) $3,500,000
• D) $3,850,000

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