On January 17,2014,an Explosion Occurred at an Boondocks Fireworks Plant

question 46

Multiple Choice

On January 17,2014,an explosion occurred at an Boondocks Fireworks plant causing extensive property damage to area buildings.Although no claims had yet been asserted against Boondocks by March 10,2014,Boondocks' management and counsel concluded that it is reasonably possible Boondocks will be responsible for damages and that $2,500,000 would be a reasonable estimate of its liability.Boondocks' $10,000,000 comprehensive public liability policy has a $500,000 deductible clause.In Boondocks' December 31,2014,financial statements,which were issued on March 25,2015,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:

Adoptive Family

A family where one or more children have been legally adopted, meaning they are not biologically related to their adoptive parents.

Extrinsic Motivation

Motivation driven by external rewards such as money, fame, grades, or praise rather than by intrinsic factors like personal satisfaction or enjoyment of the task itself.

Intrinsic Motivation

The drive to engage in activities for their own sake, for the pleasure and satisfaction derived from the activities themselves, rather than for some external reward.

Affiliation

Describes a connection or association with a group, organization, or set of beliefs.